Amex buys coalition scheme operator
Eur496m acquisition of major European loyalty player
American Express has acquired a majority stake in Loyalty Partner which operates the massive Payback coalition rewards scheme in Germany.
The credit card company is paying Eur496m to Palamon Capital Partners to buy its 54% stake in Loyalty Partner, which also operates schemes in Poland and India.
The acquisition will close in Q1 2011 subject to regulatory approval. Loyalty Partner’s CEO Alexander Rittweger will continue in his position.
The Payback scheme has 34 million cardholders in Germany and Amex says the deal will help it increase its presence in new international markets, adding all the scheme members to its international customer base and expanding its range of rewards and loyalty marketing services.
Palamon led the buyout of Loyalty Partner from airline Lufthansa in 2005. During Palomon’s ownership the company has more than doubled both revenue and profits, extended operations to new countries such as Poland and India, and introducing new products such as offering combined payment and loyalty cards to consumers.
The business will become part of Amex’s international consumer and small business services group, headed by its president, Douglas Buckminster.
American Express says the deal helps it boost its presence in new international markets, adding more than 34 million people to its international customer base and expanding its range of rewards and loyalty marketing services.
“The loyalty coalition model is growing rapidly in many parts of the world,” said Ed Gilligan, American Express vice chairman. “Increasingly, consumer decisions about where to shop and how to pay are based on loyalty offerings, and Loyalty Partner is a premier player in this space.”
He added that network scale, technology, marketing expertise and customer loyalty are keys to a new generation of mobile and location-based digital marketing services.
Gilligan said that Loyalty Partner will be an excellent complement to its exiting businesses due to its state-of-the-art platform, rewards that serve as a virtual currency, and large customer and partner base.
In June Payback partnered with Peepul Capital to buy a majority stake in India’s largest loyalty card provider i-mint.
The Polish version of the Payback multi-partner scheme has built up 6.5 million cardholders in its first year since launching in 2009 and is targeting 10 million members in the near future.
In addition to operating loyalty schemes, Loyalty Partner also provides market analysis, operating platforms and consulting services to help merchants grow their businesses. The company operates three subsidiaries including: Payback, the multi-partner loyalty program in Germany, Emnos, a sight-based marketing consultancy for the retail sector; and Loyalty Partner Solutions, an information technology service provider that develops customized loyalty programs for companies.
In November Amex set out its plans to offer cardholders reward redemptions for virtual goods and games produced by Zynga, which developed the Farmville Facebook game.
It has been apparent for a long time how important loyalty is in the new world order, especially with companies wanting to acquire high-value customers. The acquisition by Amex is a major illustration of this.