This article is part of Wellesley Hills Financial’s Market Movements series, found in our weekly newsletter.
What do Blockbuster, BlackBerry, and Kodak have in common?
Last Tuesday, Deluxe completed its $960 million acquisition of First American Payment Systems (“FAPS”) as Deluxe continues to diversify away from its dying enterprise checks business in an attempt to avoid the same fate as the notorious companies noted above. Deluxe was founded 106 years ago as a check printing company, offering products that increased safety and convenience for businesses using paper checks. However, as the digital revolution took root in the 1980s, Deluxe largely failed to read the room. On a real growth basis (CPI inflation-adjusted), Deluxe’s total revenue has declined at an annual rate of 4.3% over the past 15 years. Phrased differently, despite acquisitions, transformational initiatives, and overall growth within the payments and business solutions industries, Deluxe’s inflation-adjusted trailing twelve-month (“TTM”) revenue is down 48.2% from its peak in 1996.Deluxe began pivoting away from its checks business back in 2008, in favor of becoming a more holistic enterprise solutions provider. Since 2008, Deluxe has conducted 31 acquisitions, with the acquisition of FAPS being the largest. The acquisition of FAPS will cause Deluxe’s Payments TTM revenue to increase from 17% of total corporate revenue to 29%, while simultaneously giving Deluxe an entry point into an attractive merchant services market.The day after the closing announcement for FAPS, Deluxe announced a new CFO, Scott Bomar, would be joining the Company on June 14, 2021. Scott previously worked as a senior finance executive at Home Depot, where he was responsible for the company’s credit card acceptance strategy and private label credit card program. Given the recent news, Deluxe appears as committed as ever to growing its payments business. However, it remains to be seen if acquiring FAPS will right Deluxe’s trajectory or if Deluxe will soon be added to the tombstone of fallen titans.
