BMO Financial Group, the marketing face of the Bank of Montreal (CA:BMO), announced on March 10 that it had acquired the Air Miles loyalty program from Loyalty Ventures (US:LYLT), which is seeking bankruptcy protection in both the U.S. and Canada.
According to court documents, Loyalty Ventures had just US$10 million in assets and liabilities of up to US$1 billion. Loyalty Ventures shares were worth US$700 million as recently as the end of 2021. They’re currently valued at a little more than US$6 million.
The purchase of the Air Miles program by BMO makes sense, given the bank was the program’s largest partner, hugely important to Canadian customers.
“If our acquisition of the AIR MILES business is successful, we will bring the ownership of AIR MILES home to Canada and strengthen its offering for Canadian consumers and businesses together with leading Canadian, global and online program partners and merchants,” said Ernie Johannson, Group Head, North American Personal & Business Banking, BMO.
Despite losing many partners in recent years — Sobey’s, Staples, Old Navy, and Rona are just a few — Air Miles still has nearly 10 million active accounts used by two-thirds of Canadian households to collect loyalty points. It is one of the country’s largest.
Another suitor could enter the discussion. LoyaltyOne’s (Loyalty Venture’s Canadian subsidiary) bankruptcy proceedings in Canada require there be a solicitation process for the Air Miles program.
However, Patrick Sojka, the head of Rewards Canada, a provider of loyalty rewards resources, told the CBC that given BMO is the only significant partner left in the Air Miles program, there’s unlikely to be any other interest in the loyalty program.
The move by the Bank of Montreal will interest shareholders of royalty investor Diversified Royalty Corp. (CA:DIV). The company issued its own press release regarding the change in ownership of the program.
“DIV’s wholly-owned subsidiary AM Royalties Limited Partnership (“AM LP”) owns the Canadian AIR MILES trademarks and certain related Canadian intellectual property rights (collectively, the “AIR MILES Rights”),” stated its March 10 press release.
“AM LP licences the AIR MILES Rights to LoyaltyOne for use in the AIR Miles reward program business in Canada in accordance with the terms of two license agreements (collectively, the “AIR MILES Licenses”). As of the date of this news release LoyaltyOne is current in its royalty payments to AM LP under the AIR MILES Licences, which remain in force, with the most recent payment being made in January 2023. None of DIV, AM LP, or the AIR MILES Rights are subject to the CCAA or the Bankruptcy Court proceedings.”
In addition to Air Miles, Diversified Royalty earns royalties from sales at Mr. Lube, Sutton Real Estate, Mr. Mikes, Nurse Next Door, Oxford Learning Centres and Stratus Building Solutions.
In 2022, Air Miles accounted for $6.5 million of Diversified Royalty’s $50.2 million in adjusted revenue, making the loyalty program the company’s second-largest revenue generator behind Mr. Lube, which brought in $23.9 million in revenue, or 48% overall.
This article originally appeared on Fintel
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