The rumors are true. After much speculation, American Express announced Monday morning it has agreed to acquire Kabbage, one of Atlanta’s fastest growing fintech unicorns.
The two companies report the acquisition will close later this year. Kabbage’s pre-existing loan portfolio is not included in the purchase agreement and financial terms were not disclosed. AmEx states the acquisition is a major move toward the company’s “goal of being an essential partner to small businesses through a broad range of payment, cash flow and financial management tools.”
The loan lending platform’s team, products, data and IP for small businesses will be acquired by AmEx. Those products include flexible lines of credit, online bill payment, cash flow visualization tools, e-gift certificates and the company’s recently launched checking account for mom-and-pop shops, according to a news release. AmEx also plans to offer a broader set of cash flow management tools and working capital products.
“For several years, American Express has been expanding beyond our industry-leading commercial card products to offer our business customers a growing set of payment and working capital solutions,” Anna Marrs, president of global commercial services at AmEx, said in a statement. “This acquisition accelerates our plans to offer U.S. small businesses an easy and efficient way to manage their payments and cash flow digitally in one place, which is more critical than ever in today’s environment.”
With the addition of Kabbage’s technology, products and people, American Express plans to offer a broader set of cash flow management tools and working capital products to its millions of small business customers in the U.S.
“At Kabbage, we have always made the success of America’s small businesses our primary objective,” said Kabbage CEO and co-founder, Rob Frohwein. “We have built a technology and data platform that provides them with the kind of capabilities and insights often reserved for larger businesses. By joining American Express, we can help more small businesses succeed with a fully digital suite of financial products to help them run and grow their companies.”
Kabbage launched in Atlanta in 2009 as an online lender and quickly grew into one of the city’s biggest fintech startups. The company, backed by investors such as SoftBank Group Corp.’s Vision Fund and Reverence Capital Partners, clocked in a valuation of $1 billion in 2017.
Though the final price tag was not disclosed, sources told news outlets last week the deal would likely be in the neighborhood of $750 million to $1 billion.
Bloomberg reported last week that an unnamed source close to the situation said the all-cash deal could be worth as much as $850 million, including retention payments. Baron’s reported earlier this month Kabbage was on the market for as much as a $1 billion deal, so the final number could be in that neighborhood. The news organization also reported the company had hired FT Partners to handle the deal.
In recent months, Kabbage furloughed a “significant” amount of employees and began suspending customer credit lines as the economy began to falter. The company has positioned itself to help small businesses receive loans from the Payment Protection Program. Most recently, the company announced it has stepped into the banking space by offering business checking accounts to customers.
