Aug 7 (Reuters) – Activist hedge fund ValueAct Capital Management LP has taken a stake in credit card issuer American Express Co, which is struggling with the loss of several co-branded tie-ups amid intense competition.
The company’s shares jumped as much as 7 percent to $ 80.14 in regular trading, after Bloomberg reported that ValueAct had built a $ 1 billion stake and was seeking “shareholder-friendly” changes. (bloom.bg/1MSB6w7)
At that price, the company is valued at about $ 80 billion.
AmEx is not yet a core active target of ValueAct, Bloomberg said, citing people with knowledge of the matter.
However, the fund could sell its stake in AmEx if it decides against a longer-term campaign for change, Bloomberg said, adding that ValueAct had held preliminary talks with the company.
“We have been speaking with them (ValueAct), as we do with other investors, and look forward to continuing a constructive dialogue,” AmEx spokeswoman Marina Norville said in an emailed statement.
ValueAct could not immediately be reached for comment.
The hedge fund, which played a key role in shaking up Microsoft Corp’s management, tends to make long-term investments.
AmEx, which caters mainly to wealthy corporate clients, has been cutting costs to cope with stiff competition that lost it a couple of lucrative co-brand contracts.
The company said in February that warehouse club operator Costco Wholesale Corp will stop accepting its credit cards at U.S. stores from next year.
AmEx had then said that the loss would hurt earnings for the next two years.
The company also ended a co-branded deal with JetBlue Airways Corp in the first quarter.
ValueAct’s stake would account for just over 1 percent of AmEx, based on Thursday’s close.
This is dwarfed by the 15.14 percent Warren Buffett’s Berkshire Hathaway Inc held in the company at the end of March.
AmEx’s shares closed up 6.3 percent at $ 79.72 on the New York Stock Exchange. (Reporting by Richa Naidu and Neha Dimri in Bengaluru; Editing by Sriraj Kalluvila)