WEX has agreed to acquire fleet card provider Electronic Funds Source in a stock-and-cash deal.

The South Portland, Maine-based company will purchase EFS for $1.1 billion in cash and 4.0 million shares of common stock. The stock will be issued to investment funds associated with current EFS owner Warburg Pincus, which will make Warburg Pincus WEX's largest stockholder upon closing.

Additionally, Warburg Pincus managing director Jim Neary will join WEX's board of directors.

WEX approached the deal because it broadened the company's product offerings and strengthened its position in the over-the-road and corporate payments markets, WEX said in an Oct. 19 press release.

"We are very excited about the prospect of combining these two great companies, which have a strong customer orientation, aligned strategy and a complementary footprint,” said Melissa Smith, WEX’s president and chief executive officer, in the release. “We believe this acquisition strengthens our value proposition to customers with a portfolio of best-in-class offerings that will better meet their evolving needs."

EFS has focused more on the mid- and large-sized OTR fleet segments than WEX, meaning that this deal will help it diversify its earnings and reduce its sensitivity to fuel price fluctuations. The deal will also expand WEX's card offerings to include a variety of corporate card options, including a single, multi-purpose card. WEX also stands to benefit from the addition of EFS' OTR platform, which features improved functionality in controls, permitting, fuel price analytics, mobile account maintenance and acceptance in Canada.

The deal has received approval from WEX's board of directors and is subject to regulatory approval. The EFS acquisition follows an announcement last week that WEX had entered a deal to buy software-as-a-service technologies provider Benaissance.

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