Susan Gordon, Business Reporter
Left: Douglas Orane, chairman and CEO of GrcaceKennedy, has a new 10-year agreement with Western Union as the company's Caribbean agent. Right: Christina Gold, president and CEO of Western Union, will join Douglas Orane at a briefing in Kingston on Friday.- File
Western Union's purchase of a stake in GraceKennedy's money transfer and remittance business was a US$29 million deal, Wednesday Business has learned.
The two companies closed the agreement on November 1, 2007, giving Western Union a 25 per cent share in GraceKennedy Money Services Caribbean (GKMS Caribbean).
On Friday, Western Union chief executive Christina Gold - who has oversight of a network of over 320,000 agent locations in more than 200 countries and territories - will join GraceKennedy's Douglas Orane in Kingston to explain the deal and its implications to Jamaican investors.
But already, it would have allayed fears that GraceKennedy, which owns the local Western Union franchise, might lose the deal to competitors - as was being rumoured earlier this year until Orane stepped in with a strong denial. The local food conglomerate retains the other 75 per cent share of GKMS.
"The stake that Western Union bought was bought for US$29 million, or about $2 billion," said acting chief executive officer (CEO) of GK Investment, Joe Taffe.
The acquisition takes into account all of GraceKennedy' Money Services businesses in Jamaica, Trinidad and Tobago, Guyana, Antigua and Barbuda, St. Kitts-Nevis, Anguilla, St. Vincent and the Grenadines and Mont-serrat. That business segment accounts for about $3 billion of GraceKennedy's annual $36 billion of sales.
Taffe said the company sold a portion of the money-transfer operation to deepen the relationship between itself and Western Union.
Essentially, it locks in Western Union as a business partner and puts Gracekennedy in the position of being one of the international company's 'go-to' partner on its forays in the region.
Expansion opportunities
Taffe said the closer ties puts GraceKennedy in a position to explore other expansion opportunities that might come about based on the Western Union partnership, given the American company's signal that it is looking for other opportunities in emerging markets.
"We'll look for other expansion opportunities that might come about based on that," said Taffe.
The Western Union Company is a publicly listed financial services and communications firm with reported revenues topping US$3 billion annually. The company has had an agreement with GraceKennedy since 1990, as its representative in the Caribbean, a pact that has been renewed and remains in place for another 10 years.
GraceKennedy acts as the Western Union Agent in Jamaica, Trinidad and Tobago and six other Caribbean countries, offering money-transfer services at more than 230 locations throughout the region, placing it among Western Union's top agents.
"Our agreement with Western Union represents an unparalleled opportunity for two successful, mission-driven organisations to focus on providing premier money- transfer services in the Caribbean," said Orane, GraceKennedy's chairman and CEO, in a joint statement which Gold issued last Friday.
Said Gold: "We believe that this investment will further cement that relationship and will provide both companies with an opportunity to further explore this important market."
susan.gordon@gleanerjm.com
