The rumors may be true: Kabbage, Atlanta's unicorn fintech startup, is in talks for a sale to American Express Co.
Bloomberg reported Tuesday morning that the credit card company was in "advanced talks to buy Kabbage," a move that would help AmEx position itself as a lender to mom-and-pop stores.
According to an unnamed source close to the situation, the all-cash deal could be worth as much as $850 million, including retention payments. Baron's reported earlier this month Kabbage was in 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.
The unnamed source in the Bloomberg article said the deal could be announced as soon as this month, but nothing is set in stone yet. The latest valuation for Kabbage, backed by investors such as SoftBank Group Corp.'s Vision Fund and Reverence Capital Partners, was $1 billion in 2017.
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.
“Small businesses have always struggled to get basic financial services from their banks, both in the best of times and worst of times, and the PPP only exacerbated that divide,” Kabbage President and Co-founder Kathryn Petralia previously told Atlanta Inno in an email. “Since day one, we built Kabbage Checking to be a full-service business checking account designed to serve the smallest of businesses. It gives them the banking advantage large businesses enjoy, but without the start-up fees, monthly fees, maintenance fees or overdraft fees—and instead, we pay them so they can better manage and grow their money.”
A spokesperson from Kabbage said the company does not comment on rumors or speculation.
