Visa Buys Fraedom To Expand In B2B Payments Industry
Zacks Investment Research | Feb 11, 2018 09:20PM ET
Visa Inc. (NYSE:V) recently announced that it has entered into a definitive agreement to acquire Fraedom, which has been in a partnership with Visa for about 10 years. The transaction is subject to the customary closing conditions and is expected to be completed in the first half of 2018.
Fraedom is a Software-as-a-Service technology company, specialized in providing payments and transaction management solutions for financial institutions and their corporate customers. Visa IntelliLink Spend Management, a core platform for Visa’s commercial and small-business clients, already uses Fraedom’s technology.
Why Fraedom?
For more than 17 years, Fraedom has been serving financial institutions, payment networks, processors, governments and technology companies worldwide. The company’s offerings primarily include transaction management products and services that comprise expense management and accounts payable solutions.
The company’s mobile-first experiences make critical tasks simple, quick and intuitive for corporate users. Hence, this buyout is expected to bolster Visa’s ability to meet the rapidly changing needs of the Business-to-Business (B2B) payments industry.
Visa’s Inorganic Growth
Accretive acquisitions have remained one of the primary long-term growth strategies for Visa. The company’s acquisition of Visa Europe in June 2016 helped it gain a competitive edge from a robust business model and increased scale. The deal has significantly boosted Visa’s payments volume, cross-border volume and processed transactions.
Similarly, the acquisition of Fraedom is also expected to enable Visa cater innovative, global, highly configurable and intuitive business solution to its corporate clients.
Solid Balance Sheet Enables Acquisition
Visa has a solid cash position along with strong free cash flow. Its robust balance sheet enables it to make acquisition and fund capital expenditure that drives long-term growth.
Share Price Performance
Visa’s inorganic growth has strengthened its revenue base significantly, boosting shareholders’ confidence in the stock. In a year, its shares have gained 34.6%, outperforming the Zacks Investment Research
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