Western Union 2011 Annual Report Download - page 109

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THE WESTERN UNION COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
3. Acquisitions
2011 Acquisitions
On November 7, 2011, the Company acquired the business-to-business payment business known as Travelex
Global Business Payments (“TGBP”) from Travelex Holdings Limited for cash consideration of £603 million
($967.8 million), plus an initial working capital adjustment. The acquisition of the French assets of TGBP for
cash consideration of £3 million (approximately $4.7 million based on currency exchange rates at December 31,
2011) has not been finalized as of December 31, 2011. This acquisition is expected to close in 2012, subject to
regulatory approval and satisfaction of closing conditions. The final consideration and the final purchase price
allocation are subject to an additional working capital adjustment, further analysis of tax balances, final valuation
of identifiable intangible assets, and other items. For the year ended December 31, 2011, the Company incurred
$20.7 million of costs associated with the closing of this acquisition. With the acquisition of TGBP and the
Company’s existing Business Solutions business, the Company has the ability to leverage TGBP’s
business-to-business payments market expertise, distribution, product and capabilities with Western Union’s
brand, existing Business Solutions operations, global infrastructure and relationships, and financial strength. The
results of operations for TGBP have been included in the Company’s consolidated financial statements from the
date of acquisition.
On October 31, 2011 and April 20, 2011, the Company acquired the remaining 70% interests in European-
based Finint S.r.l. (“Finint”) and Angelo Costa S.r.l. (“Costa”), respectively, two of the Company’s largest agents
providing services in a number of European countries. The Company previously held a 30% equity interest in
each of these agents. The Company expects these acquisitions will help accelerate the introduction of additional
Western Union products and services and will leverage its existing European infrastructure to build new
opportunities across the European Union. The acquisitions do not impact the Company’s money transfer revenue,
because the Company was already recording all of the revenue arising from money transfers originating at
Finint’s and Costa’s subagents. As of the acquisition dates, the Company no longer incurs commission costs for
transactions related to Finint and Costa; rather the Company now pays commissions to Finint and Costa
subagents, resulting in lower overall commission expense. The Company’s operating expenses include costs
attributable to Finint’s and Costa’s operations subsequent to the acquisition dates.
The Company acquired the remaining 70% interest in Finint for cash consideration of €99.6 million
($139.4 million). The final purchase price allocation is subject to further analysis of tax balances and other items.
The Company revalued its previous 30% equity interest to fair value of approximately $47.8 million on the
acquisition date, resulting in total value of $187.2 million. In conjunction with the revaluation, the Company
recognized a gain of $20.5 million, recorded in “Other income, net” in the Company’s Consolidated Statements
of Income, for the amount by which the fair value of the 30% equity interest exceeded its previous carrying
value.
The Company acquired the remaining 70% interest in Costa for cash consideration of €95 million
($135.7 million), which included a reduction of €5 million ($7.1 million) for an initial working capital
adjustment pursuant to the terms of the purchase agreement. The final consideration and the final purchase price
allocation are subject to an additional working capital adjustment. The Company revalued its previous 30%
equity interest to fair value of approximately $46.2 million on the acquisition date, resulting in total value of
$181.9 million. In conjunction with the revaluation, the Company recognized a gain of $29.4 million, recorded in
“Other income, net” in the Company’s Consolidated Statements of Income, for the amount by which the fair
value of the 30% equity interest exceeded its previous carrying value.
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