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U.S. Bancorp's Elavon to Sell Mexico Operation to Santander

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U.S. Bancorp’s (USB - Free Report) subsidiary, Elavon, has announced plans to divest its Mexico-based operations to Santander. The deal, subject to regulatory approval, is expected to close in the next few weeks.

Based in Atlanta, Elavon provides payment processing solutions and services to more than 1.3 million customers in the United States, Europe, Canada, Mexico and Puerto Rico.

Per the deal, all Elavon’s employees in Mexico, including operations and customer relationships, will be transferred to Santander. The company noted that the divesture is not expected to have any impact on its other operations.

Jamie Walker, CEO of Elavon, said “We have been pleased with the performance of our business in Mexico. This agreement is a mutually-beneficial opportunity that will allow Santander to operate the business holistically and allow Elavon to focus investments in higher growth opportunities in other markets in the United States, Canada and Europe.”

Another financial institution that is also resorting to divestitures in order to improve operating efficiency and shed less profitable businesses is Moody’s (MCO - Free Report) . It closed the divestiture of MAKS, its Moody’s Analytics Knowledge Services business in November 2019.

Other peers like Barclays PLC (BCS - Free Report) has entered into an agreement to sell its U.S. automated options trading division. Further, Hilltop Holdings Inc. (HTH - Free Report) has inked a deal to divest its wholly owned subsidiary, National Lloyds Corporation.

Our Take

We believe U.S. Bancorp, with its solid business model, is well poised for growth. Also, the company remains focused on improving its overall performance by undertaking inorganic growth strategies. Efforts to be in line with the banking sector’s shift to digitization are impressive.

Shares of U.S. Bancorp have gained 35.8% compared with the industry’s growth of 5.3%, over the past six months.

Currently, U.S. Bancorp carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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