In a two day span at the beginning of April of this year, American Express lost nearly $9 billion in market value, after failing to secure a co-branding contract with Costco Wholesale Corporation.
This is according to a lawsuit that has been filed in Manhattan federal court by Plumbers and Steamfitters Local 137 Pension Fund, a shareholder of AmEx. The lawsuit claims that AmEx hid from them how crucial the contract was to AmEx’s business.
The co-branding agreement that AmEx failed to successfully renew had been a part of both AmEx’s and Costco’s business since 1999. The complaint argues that AmEx, by failing to express to shareholders the importance and magnitude of the business generated by the Costco agreement, AmEx overstated its U.S. card growth.
The lawsuit is Plumbers steam Lifters Local 137 Pension Fund v. American Express Company, U.S. District Court, Southern District of New York, No. 15-05999.