Payback's controlling interest changes hands
Loyalty Partner, the operator of Germany's PAYBACK customer loyalty programme has announced a change-around of shareholders, with UK-based Palamon Capital Partners about to acquire a controlling interest in the company from Lufthansa Commercial Holding.
Under the terms of the deal, Lufthansa Commercial Holding will sell its entire 52.6% share in Loyalty Partner GmbH, while parent company Metro will hold approximately 10% of the newly organised Loyalty Partner structure after the transaction is closed. At the same time Alexander Rittweger, CEO and founder of Loyalty Partner, will raise his stake in the company from 14.8% to some 20%, and Roland Berger will hold an unchanged share of 7.5%. All partners have agreed not to disclose the sums of money involved.
Expansion time Palamon Capital Partners will support the existing management in further developing the company's market position. The company's headquarters will remain in Munich. Rittweger welcomed the partnership with the new shareholder: "In the past seven years we have built up Loyalty Partner from a standing start to a successful company with superb growth prospects. As the build-up period is now nearing completion, and expansion of our businesses in Germany and abroad becomes our focus, we are very enthusiastic about Palamon as our new partner, considering their significant experience in building service-oriented businesses throughout Europe."
Twelve years Matthew Turner and Daan Knottenbelt, both partners at Palamon, commented: "Palamon invests in growth companies. With Loyalty Partner, we have invested in a company with an impressive track record and a unique market position. We look forward to supporting Loyalty Partner's management team as they continue to build out their business. As the Palamon funds have a 12 year life, we provide an ample timeframe for the company to deliver significant growth."
New board Following closure of the transaction, Jürgen Weber, chairman of the Loyalty Partner supervisory board and chairman of Deutsche Lufthansa AG supervisory board, will continue on as the chairman of the supervisory board. Dr. Hans-Joachim Körber, CEO for Metro AG, and Roland Berger will also be members of the newly appointed supervisory board, and two new members will be nominated by Palamon.
Loyalty unaffected The cooperation between the PAYBACK and the Miles & More loyalty programme of Lufthansa will not be affected by the transaction, and PAYBACK members will still be able to exchange their PAYBACK points for Lufthansa Miles.
Loyalty Partner was established in 1998 to develop and operate the successful PAYBACK loyalty card scheme. With more than 28 million cards, PAYBACK is now the third most used plastic card in German wallets, and is recognised as a 'top ten' consumer brand in Germany.
Background PAYBACK has more than a dozen core partners accounting for some Euro 20 billion in retail sales. Partners include Real (a hypermarket group), Galeria Kaufhof (department stores), OBI (DIY stores) and dm (a drugstore group). In 2004 Loyalty Partner's revenues were Euro 125 million. Loyalty Partner also owns two additional companies: Billing & Loyalty Systems (billing operations) and 5one (consultancy).
In addition to the PAYBACK card business, Loyalty Partner also markets a fast growing Visa Card programme in Germany - the PAYBACK VISA card - in a joint venture with Landesbank BadenWurttemburg. It also markets motor and other insurance policies in partnership with HDI, and a mobile phone subscription in partnership with Vodafone. Loyalty Partner also operates the frequent traveller programme, 'bahn comfort' for Deutsche Bahn and is in the process of expanding its loyalty and CRM programme outsourcing business.