UPDATE 2-Mastercard buys Travelex division for $460 mln

* Mastercard buying Travelex’s card programme management arm

* Deal worth an initial 290 mln stg

* Mastercard says deal will dilute 2011 EPS

* Deal will be accretive for Mastercard at the start of 2013

(Updates with confirmation of deal, further detail)

By Sudip Kar-Gupta and Ben Deighton

LONDON/BRUSSELS, Dec 9 (BestGrowthStock) – MasterCard (MA.N: ) is
buying the prepaid cash card business of foreign exchange group
Travelex for 290 million pounds ($459 million), boosting its
presence in a fast-growing financial services segment.

Mastercard said the transaction would be $0.04 dilutive to
its 2011 earnings per share as a result of amortization and
integration costs. It added it could pay an extra 35 million
pounds if the business meets certain performance targets.

Travelex’s card programme management (CPM) division provides
prepaid “cash passports” for overseas travellers to use at cash
machines or to make purchases.

MasterCard is the world’s second-largest credit and debit
card processing company, behind rival Visa Inc (V.N: ). Both
companies have said they plan to devote some of the billions of
dollars of cash they have on hand to make acquisitions.

Mastercard sees pre-paid cards as one of the fastest growing
parts of the financial services industry, with volumes in this
sector set to reach more than $840 billion by 2017.

“The acquisition of Travelex’s CPM operations underscores
MasterCard’s commitment to the global prepaid business, which
remains a key strategic focus for us,” said Ajay Banga,
MasterCard president and chief executive.

For Travelex, the transaction provides it with extra cash
for its own expansion plans.

The deal will not change the shareholding structure of
Travelex, majority-owned by private equity group Apax and often
touted as a potential candidate for a listing.

Travelex founder Lloyd Dorfman, who set up the company in
1976, also has a significant stake in the group.

Travelex reported a 3 percent dip in first-half earnings in
September, saying at the time it was confident its full-year
profit would be higher than in 2009. [ID:nLDE68E0EG]

Mastercard said it expected the acquisition to be neutral to
its earnings in 2012 and accretive in 2013.
($1=.6317 Pound)
(Additional reporting by Simon Meads and Maria Aspan; Editing
by Dan Lalor and David Cowell)

UPDATE 2-Mastercard buys Travelex division for $460 mln