American Express Buying Revolution Money for $300 Million (AXP)

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Credit card issuer American Express Company (AXP) said Wednesday that it is buying secure Internet payments processor Revolution Payments for a reported $300 million.

Revolution Money was launched in 2007 by AOL co-founder Steve Case’s company, Revolution LLC. Its payment system differs from others in that no names appear on Revolution cards, and transactions are processed using only a PIN number.

AmEx CEO Kenneth I. Chenault said in a statement that “New payments products and platforms are evolving rapidly and it’s important for us to keep identifying cutting edge technologies that can extend our leadership beyond the traditional payments arena.” He also noted that “While Revolution Money is a young and relatively small company, we believe it has big potential. This is a smart, nimble business. It’s run by an accomplished management team who have quickly developed some cutting edge e-payment offerings. Joining with American Express will help unlock their potential, while allowing us to deliver competitive online payment products more rapidly and efficiently.”

The deal is subject to regulatory review, and is expected to close in the first quarter of 2010.

American Express shares were mostly flat in premarket trading Wednesday following the announcement.

The Bottom Line
Shares of AXP have a dividend yield of 1.74%, based on last night’s closing stock price of $41.36. The stock has technical support in the $35 price area. If the shares can continue on the recent torrid run, we see overhead resistance around the $43-$45 price levels. We would remain on the sidelines for now.

American Express Company (AXP) is not recommended at this time, holding a Dividend.com DARS™ Rating of 3.4 out of 5 stars.

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