FLEETCOR announces cooperation agreement with D.E. Shaw, strategic review, new Board member

© Reuters.

By Davit Kirakosyan

FLEETCOR Technologies (NYSE:FLT) announced it has entered into a cooperation agreement with longtime shareholder D.E. Shaw. As part of the agreement, FLEETCOR has appointed Rahul Gupta to its Board of Directors, agreed to add another, mutually agreed-upon director to the Board, agreed to form an ad hoc Strategic Review Committee, and undertake a review of its portfolio and business configuration.

The portfolio review will assist the board as it considers strategic alternatives, including the possible separation of one or more of the company's businesses. It intends to complete the portfolio review by the end of 2023.

Shares gained more than 6% today following the announcement, but are currently down 5% after-hours.

According to Wells Fargo, the announcement of a strategic review should be well-received, noting it makes sense given the company's disparate mix of businesses and current valuation.

The firm believes the Gift segment could be the primary option for sale if the company wants to streamline itself and focus on its faster-growing businesses. “A Corporate Payments spin-out could be interesting from a multiple perspective,” added the firm. It reiterated its Overweight rating and $240 price target on the stock.

Meanwhile, Wolfe Research said that D.E. Shaw's involvement in Fleetcor Technologies places emphasis on valuation, medium-term potential, and a SOTP pointing to the upside from current levels. This approach contrasts with the current mixed sentiment, which is primarily centered on the near-term challenges of top-line growth due to cyclical headwinds and concerns about dilution in Russia, added the firm. It maintained the Peer Perform rating on the stock.