BMO Financial Group inks US$160M deal to buy Air Miles loyalty rewards program

BMO Financial Group introduced a deal Friday to purchase the Air Miles loyalty rewards program in Canada after its U.S. dad or mum firm filed for chapter.

The financial institution’s so-called stalking horse supply for LoyaltyOne Co. is US$160 million, topic to sure changes, in response to court docket paperwork.

Air Miles president Shawn Stewart stated the deal “brings stability to the Air Miles program.”

“It gives us the opportunity to grow the program for our collectors and partners, and confidence in the future of the program,” he stated in an interview.

“Our U.S. parent company had a ton of debt and that just constrained our ability to invest in value for the collector.”

The deal has no impression on reward miles balances or the power to redeem miles, Stewart added.

Air Miles is without doubt one of the oldest and largest loyalty packages in Canada, with practically 10 million lively customers.

Collectors earn Air Miles by way of taking part shops, providers and cost playing cards, which will be redeemed for “aspirational rewards” like merchandise, journey, occasions, and sights.

Yet Air Miles has misplaced a string of massive retailers in Canada in recent times.

Last summer season, Sobeys and Safeway proprietor Empire Co. Ltd. and workplace provide retailer Staples stated they might be scrapping the Air Miles program, a yr after the Liquor Control Board of Ontario and Lowe’s Canada pulled out of this system.

The Air Miles dad or mum firm inventory, which was traded on Nasdaq, fell after Sobeys pulled out of this system.

Loyalty Ventures Inc., the dad or mum firm of LoyaltyOne, filed for Chapter 11 chapter within the U.S. on Friday. It additionally delisted its widespread inventory from the Nasdaq.

The BMO deal for Air Miles has been proposed as a part of LoyaltyOne’s continuing below the Companies’ Creditors Arrangement Act in Canada.

The course of will embrace a sale and funding solicitation course of to hunt another curiosity within the Air Miles business.

The sale transaction is contingent on LoyaltyOne not receiving a extra beneficial supply and would require court docket approval.

BMO, a founding companion of Air Miles since 1992, stated the acquisition would speed up the loyalty program’s future development.

“We will bring the ownership of Air Miles home to Canada and strengthen its offering for Canadian consumers and businesses,” stated Ernie Johannson, BMO’s group head, North American private and business banking.

The financial institution is approaching Air Miles with a “long-term perspective, not a short-term tactical” method a holding firm primarily based overseas would possibly take, she stated.

With a holding firm “there isn’t necessarily the same belief in the program,” stated Johannson, who by probability began her profession 30 years in the past with Air Miles. “We want to run it like an entity and be able to fund it, grow it and inspire it”.

Rewards packages have proliferated in recent times as corporations search to be taught extra about clients and their procuring habits.

The information collected by way of these packages is used to focus on clients with tailored advertising provides and promotions in a bid to extend gross sales and loyalty.

The mounting worth of loyalty packages has prompted some retailers to undertake and develop their very own packages.

Last June, Empire stated it could scrap the Air Miles program after it grew to become a co-owner of the Scene+ program operated by Cineplex Inc. and Scotiabank.

Stewart, who joined Air Miles final spring after eight years constructing and rising Canadian Tire Corp.’s Triangle Rewards loyalty program, stated it is an more and more aggressive market.

But Air Miles nonetheless has a aggressive edge, particularly for small- and medium-sized companies which may not have the dimensions to put money into their very own loyalty program, he stated.

“With Air Miles you get the benefit of access to 10 million collectors out of the gate,” Stewart stated. “We’re lending our scale and a very well-known recognized brand to businesses.”

Still, whereas Air Miles is obtainable by some small mother and pop outlets, it continues to boast a variety of bigger retail companions, together with Metro grocery shops and its drugstore chain Jean Coutu, American Express Canada, Irving and Shell gasoline stations in addition to on-line companions like Amazon and eBay.

This report by The Canadian Press was first revealed March 10, 2023.