Western Union CO Goodwill & Intangibles Disclosure
5. Divestitures, Acquisitions, and Goodwill
Divestitures of Businesses
On February 28, 2019, the Company entered into an agreement with ACI Worldwide Corp. and ACW Worldwide, Inc. (together, “ACI”) to sell its United States electronic bill payments business known as Speedpay, which had been included as a component of Other in the Company’s segment reporting. The Company received approximately $750 million and recorded a pre-tax gain on the sale of approximately $523 million, which is included in Gain on divestitures of businesses in the accompanying Consolidated Statements of Income, in the all-cash transaction that closed on May 9, 2019. Speedpay revenues included in the Company’s results were $125.4 million and $352.0 million for the years ended December 31, 2019 and 2018, respectively. Speedpay direct operating expenses were $98.2 million and $251.2 million for the years ended December 31, 2019 and 2018, respectively.
On May 6, 2019, the Company completed the sale of Paymap Inc. (“Paymap”), which provides electronic mortgage bill payment services, for contingent consideration and immaterial cash proceeds received at closing. The Company recorded an immaterial pre-tax gain related to this sale during 2019.
In 2020, the Company sold its former corporate headquarters and other property and recorded an immaterial pre-tax net gain on the sales. The proceeds from these sales have been included in Cash flows from investing activities within the Company’s Consolidated Statements of Cash Flows for the year ended December 31, 2020.
Investment in Saudi Digital Payments Company
On November 21, 2020, the Company entered into an agreement to acquire an ownership interest in Saudi Digital Payments Company (“stc pay”), a subsidiary of Saudi Telecom Company and one of the Company’s Consumer-to-Consumer digital white label partners. Under the terms of the agreement, the transaction is intended to occur in two tranches. In the first tranche, the Company agreed to invest approximately $133 million for a 10% investment in stc pay, and, in the second tranche, the Company agreed to invest an additional approximately $67 million for an additional 5% investment in stc pay. The first tranche is expected to close in the first quarter of 2021 and the closing of the second tranche is contingent upon stc pay satisfying certain conditions. In conjunction with the transaction, the Company and stc pay have also agreed to extend and expand the terms of their commercial agreement.
The Company expects to measure this investment at cost, less any impairment, adjusted for any changes resulting from observable price changes in orderly transactions for identical or similar investments in stc pay.
Goodwill
The following table presents changes to goodwill for the years ended December 31, 2020 and 2019 (in millions):
| Consumer-to- |
| Business |
|
| |||||||
Consumer | Solutions | Other | Total | |||||||||
January 1, 2019 goodwill, net | $ | 1,980.7 | $ | 532.0 | $ | 212.3 | $ | 2,725.0 | ||||
Divestitures (a) |
| — |
| — |
| (158.4) |
| (158.4) | ||||
December 31, 2019 goodwill, net | $ | 1,980.7 | $ | 532.0 | $ | 53.9 | $ | 2,566.6 | ||||
Additions | — | — | — | — | ||||||||
December 31, 2020 goodwill, net | $ | 1,980.7 | $ | 532.0 | $ | 53.9 | $ | 2,566.6 | ||||
| (a) | Related to the Speedpay and Paymap divestitures, as described above. |
The following table presents accumulated impairment losses as of December 31, 2020, 2019, and 2018 (in millions):
As of December 31, | |||||||||
| 2020 |
| 2019 |
| 2018 | ||||
Goodwill, gross | $ | 3,030.6 | $ | 3,030.6 | $ | 3,189.0 | |||
Accumulated impairment losses |
| (464.0) |
| (464.0) |
| (464.0) | |||
Goodwill, net | $ | 2,566.6 | $ | 2,566.6 | $ | 2,725.0 | |||
The Company did not record any goodwill impairments during the years ended December 31, 2020, 2019, and 2018.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2020 | Feb 19, 2021 | Showing above |
| 2019 | Feb 20, 2020 | |
| 2018 | Feb 21, 2019 | |
| 2017 | Feb 22, 2018 | |
About Goodwill & Intangibles Disclosures
Goodwill and intangible asset disclosures reveal the premium paid in acquisitions and how management assesses whether that premium retains its value. Since goodwill is no longer amortized under US GAAP, the annual impairment test is the only mechanism that adjusts carrying values downward — making the assumptions behind that test critically important for investors.
Key signals: a history of goodwill impairments suggests management consistently overpays for acquisitions. Watch the gap between reporting unit fair value and carrying amount — when fair value exceeds carrying amount by less than 10-20%, a small decline in business performance could trigger a write-down. For finite-lived intangibles, examine useful life assumptions across customer relationships, technology, and trade names; aggressive estimates inflate near-term earnings. Compare total intangibles-to-total-assets ratios against peers to assess acquisition dependency. Rising goodwill as a percentage of equity can signal balance sheet fragility.