Payment solutions company WEX has backed out of the deal
to buy Travelport’s eNett and virtual card issuer Optal, citing business
conditions as a result of the coronavirus pandemic.
Travelport, eNett and Optal said they plan to hold WEX to the acquisition agreement.
In total, WEX would have paid $1.7 billion for both
companies, with the majority of that ($1.28 billion in cash and 2 million in common
shares) for eNett.
WEX talked about the decision in its first-quarter earnings
“The company has analyzed the eNett and Optal situation
closely with specialist advisors and has concluded that the pandemic and
conditions arising in connection with it have had, and continue to have, a
material adverse effect on the business,” WEX said. “Because of this material
adverse effect, WEX has advised eNett and Optal that it is not required to
close the transaction persuant to the terms of the purchase agreement.”
Travelport and Optal objected to the decision. They
argued in a statement
that the purchase agreement was executed while Covid-19 was already spreading,
on Jan. 24.
The companies contend that the purchase agreement excluded
the effects of a pandemic, as well as changes to laws or regulations including
governmental travel restrictions, in its definition of “material adverse
“WEX therefore assumed all of these risks when it signed the
purchase agreement,” they said.
“eNett, Travelport and Optal intend to vigorously enforce their
contractual rights and to hold WEX to its promises under the purchase
agreement,” they added. “eNett, Travelport and Optal expect WEX to perform its
contractual obligations, including to finalize its financing, obtain the
remaining governmental approvals, and close the transaction.”
eNett enables travel agencies to generate unique
16-digit Mastercard virtual account numbers, which are used to pay travel suppliers.