Western Union Announces Organizational Changes to Improve Efficiency and Drive Long-Term Growth

Is this a reaction to Visa and MasterCard entering the P2P fray?  

ENGLEWOOD, Colo.--(BUSINESS WIRE)--The Western Union Company (NYSE: WU) today announced a global initiative to simplify its business processes, move decision-making closer to the marketplace, and leverage its cost structure. The multi-phased initiative includes a smaller, more streamlined management and changes to its global operations.

“The changes we are announcing today are difficult, because they impact people who have contributed to Western Union’s success. However, simplifying our structure will allow us to improve our productivity and customer focus, capitalize on growth opportunities, and enhance long-term financial returns for our shareholders.”

The new management structure will result in fewer reporting layers across the organization. As part of the new structure, the number of Executive Vice Presidents, Senior Vice Presidents, and Vice Presidents will be reduced, and the Company’s consumer bill payment business will report to Stewart Stockdale, President – The Americas and Executive Vice President, Global Cards and Global Key Accounts. A new Executive Vice President position will be created, focusing on electronic channels and new customer segments, both consumer and business. The proposed changes to business operations include the closing, consolidation, and downsizing of facilities and the creation of a new regional operations center in Europe.

Most of the management changes will be effective in the next 30 days, while the changes to business operations are expected to occur over the next 18 months. If implemented as proposed, the company anticipates that the initiatives will result in the elimination of approximately 175 positions and the migration of the work performed by approximately 550 positions, subject to the necessary individual and collective employee information and consultation obligations required by local law for potentially affected employees. The Company expects annualized pre-tax savings of approximately $50 million from these initiatives when they are fully implemented by 2012. The Company anticipates recording a total of approximately $80 million of restructuring charges through 2011, which includes $75 million for severance, facility closure and other costs related to this restructuring, in addition to charges associated with actions previously announced during the quarter.

“We are committed to aligning our organization to support our key strategies and opportunities,” said Hikmet Ersek, Chief Operating Officer and CEO-Elect. “The changes we are announcing today are difficult, because they impact people who have contributed to Western Union’s success. However, simplifying our structure will allow us to improve our productivity and customer focus, capitalize on growth opportunities, and enhance long-term financial returns for our shareholders.”

The Company’s key strategies focus on profitable growth in the core cash money transfer business, rapid development of electronic channels to supplement and complement cash money transfer, and the expansion of business payments.

If implemented as proposed, a significant majority of the restructuring charges is expected to be recorded in 2010, with the remainder to be recorded in 2011. If implemented as proposed, approximately $10 million of savings from these initiatives is anticipated in 2010, $30 million to $40 million in 2011, and $50 million annualized beginning in 2012. The estimated expenses and savings were not contemplated in the 2010 financial guidance provided by the Company on April 27, 2010.

About Western Union

The Western Union Company (NYSE: WU) is a leader in global payment services. Together with its Vigo, Orlandi Valuta, Pago Facil and Custom House branded payment services, Western Union provides consumers and businesses with fast, reliable and convenient ways to send and receive money around the world, as well as send payments and purchase money orders. The Western Union, Vigo and Orlandi Valuta branded services are offered through a combined network of more than 420,000 agent locations in 200 countries and territories. In 2009, The Western Union Company completed 196 million consumer-to-consumer transactions worldwide, moving $71 billion of principal between consumers, and 415 million business payments. For more information, visit www.westernunion.com.

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