GXS to Expand by Buying Brazilian Service Provider

GXS of Gaithersburg plans to announce today that it's buying Interchange Serviços, one of the biggest business-to-business (B2B) service providers in Brazil. The deal will add almost 140 employees, plus contractors, to its current 1,700 workers. Interchange Serviços will contribute less than 10 percent of GXS's overall revenue. GXS declined to provide the cost of the purchase.

Companies including General Electric, home improvement chain Lowe's, and Royal Ahold, owner of Giant supermarkets, hire GXS to handle communications with their trading partners.

GXS chief executive Bob Segert said the company did not need to tap into cash from its owner, private-equity fund Francisco Partners, to make the deal. The B2B service provider had the cash to buy Interchange, he said, because it is somewhat insulated from the economic slowdown. The company benefits from its use of minimum-volume contracts that require customers to pay a certain amount even if they are doing less business.

GXS sees potential for more contracts overseas, including in Brazil. "We feel like it's a market that's not really been focused on enough," Segert said. The economic growth there has meant an increasing need for supply-chain management and other technologies, the company said.

GXS is also interested in expanding in Japan, China and Europe. "I don't think we can be in a position where we underinvest with what's happening in China," he said.

Acquisitions will help drive revenue growth of about 5 to 10 percent this year, Segert said. One concern, however, is the outlook for companies in the automotive industry, which GXS counts as customers. If any file for bankruptcy, he said, GXS could have trouble getting money it is owed. "We're cautiously watching that sector," he said.

Segert said the company is growing and is situating itself for an exit from private-equity ownership, though the current market is tough. It could be sold, he said, or go public -- but that might be two or three years off.

-- Terri Rupar