A British court has ruled that Portland-based Wex Inc. can push ahead with its effort to nullify an agreement to acquire two British firms because of the coronavirus pandemic’s negative impact on their financials.
Portland-based Wex, which provides payment-processing technology and services, said Monday it is pleased with the ruling of British judge that allows it to make its case for withdrawing from a deal to buy two British firms. Shawn Patrick Ouellette/Staff Photographer
Wex, which provides payment-processing technology and services, announced in May that it planned to scrap the deal to buy eNett and Optal, two business-to-business travel payment transaction companies, for $1.7 billion. It said the pandemic has had an outsize negative effect on the two companies, which gives Wex grounds to back out under the terms of its purchase agreement.
But the owner of the two companies, New York-based hedge fund management firm Elliott Management Corp., sued in a British court, saying Wex had no right to cancel the deal.
After a “preliminary issues hearing,” the High Court of Justice of England and Wales ruled Monday that Wex could attempt to argue at trial that the pandemic had hurt the business of the two companies so much that the impact triggered a clause in the purchase agreement allowing it to withdraw from the deal.
The issue will now to go trial, where the impact of the pandemic on eNett and Optal will be compared with other companies in the business-to-business payments industry to assess whether the companies have been disproportionately impacted by the pandemic compared with other companies in the industry.
Wex said Monday that it was pleased with the ruling.
“We believe this ruling supports our determination that (eNett and Optal) have been disproportionately impacted by COVID-19 and Wex is not required to close the transaction, as we stated in May,” Melissa Smith, Wex’s chairwoman and chief executive, said in a statement.
In its statement, Wex said there is a possibility the court’s finding could be appealed, but that the company “remains confident in its belief that eNett and Optal have been and are disproportionately impacted” by the pandemic.
The company did not respond to a request for further comment on the ruling.
Wex’s stock shot up more than $10 a share at the outset of trading Monday and ended the day at $156.15 a share, up $5.88, or 3.9 percent, for the day.
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