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American Express to Buy Santa Ana's Rockford Inc.

Expansion: Company finances and leases equipment to small businesses. Deal will cost $61 million in stock.

November 11, 1998|From Bloomberg News

American Express Co., moving to expand its small-business services, said Tuesday it agreed to buy Santa Ana-based Rockford Industries Inc., which finances and leases equipment for small businesses.

New York-based American Express, a travel and financial services company, will pay Rockford shareholders about $61 million in stock, or the equivalent of $11.88 a share. Rockford will become an American Express subsidiary.

Rockford shares moved up 44 cents to $11.31 on trading of 425,100 shares, more than 20 times the average daily volume over the last three months. The stock was trading at $5 less than a month ago.

With Rockford, American Express will be able to offer its 1.6 million small-business customers leases through equipment manufacturers and vendors.

It will also boost its maximum lease to $250,000 from $25,000. American Express as of June 30 had lent $1.3 billion to small-business owners from credit cards, equipment financing and lines of credit.

"Rockford is a strong complement to our own small-business lending capabilities," said Steven Alesio, president of American Express Small Business Services. The purchase "provides us the expertise to finance significantly larger purchases."

Rockford lends money to small-business owners through more than 1,000 vendors and manufacturers of health care, telecommunications, information technology and general office equipment. Rockford finances equipment from companies like Allergan Inc., Bergen Brunswig Corp., Cisco Systems Inc., Medic Computer Systems Inc. and Respironics Inc.

Rockford earned $1.7 million and lent $168 million in the first nine months of this year. The company reported net income of $2.1 million last year on revenue of $19.1 million. It made $166.7 million in new loans during the year.

The agreement is subject to approval of regulators and Rockford shareholders. Those shareholders are expected to meet early in 1999 to vote on the acquisition.

Gerry Ricco, Rockford president and chief executive officer, will join American Express as president, vendor financing.

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