Three-and-a-half months after agreeing to the US$1.7 billion acquisition of virtual travel payments providers eNett and Optal, Wex Inc wants to back out of the deal, citing the effect in the corporate travel sector of the Covid-19 pandemic ¨C but the sellers say not so fast.

In January, Wex signed a definitive agreement to purchase eNett from majority owner Travelport and minority equity investor Optal, while also acquiring Optal itself. The sale price included US$1.275 billion in cash along with issuance of two million shares of common stock to the sellers.

The deal was approved by Wex's board of directors and was set to close by the middle of this year.

But the onset of the global Covid-19 outbreak changed all that, according to Wex, which said on Thursday that the pandemic had caused the company to rethink the deal, asserting its right to do so under the agreement.

Wex "has concluded that the pandemic and conditions arising in connection with it have had, and continue to have, a material adverse effect on the businesses," of eNett and Optal, the company said in a statement. "Because of this material adverse effect, Wex has advised eNett and Optal that it is not required to close the transaction pursuant to the terms of the purchase agreement".

Wex's counterparties in the transaction didn't take the news kindly, immediately issuing a strongly worded rebuttal to Wex's announcement.

The companies said that "eNett, Travelport and Optal reject Wex's attempt to walk away from its binding agreement" ¨C adding that the outbreak of the virus was already apparent when the deal was signed in January.

"The purchase agreement, which was executed on 24 January 2020, after Covid-19 had already publicly begun its spread across the globe, expressly excludes the effects of a pandemic from the definition of Material Adverse Effect," the sellers' statement said. "In addition, the definition of Material Adverse Effect also excludes the effects of any changes in laws or regulations, such as governmental travel restrictions. Wex therefore assumed all of these risks when it signed the purchase agreement."

Travelport and Optal said they intend to "vigorously enforce" the sale agreement and expect Wex to "perform its contractual obligations, including to finalise its financing, obtain the remaining governmental approvals, and close the transaction¡±.

During its first-quarter earnings call, Wex CEO Melissa Smith said the decision to pull out was not made lightly, noting that Wex had never before "walked away from a signed deal¡±.

"We wanted to be absolutely sure of our position before we made the step of notification," Smith said, declining to speculate on next steps and whether the deal might be salvaged should the sellers offer a lower price.

The acquisition of eNett and Optal had been seen as another significant step in the growth of Wex's corporate travel payments business. The Portland, Maine-based company, which was founded in 1983 as a fleet and fuel card specialist, has in recent years emphasised virtual corporate travel payments as it grew into a multibillion-dollar global company.

According to filings, eNett, which specialises in generating virtual account numbers for payments for hotels and other non-air suppliers, had enjoyed a 36 per cent compounded growth rate in its purchase volume since 2016.

But the Covid-19 pandemic has ground corporate travel to a screeching halt since mid-March and had taken a significant bite out of Wex's own bottom line. The company this week reported a first-quarter loss of US$16.3 million, despite strong results during the first half of the quarter, before the virus took hold around the world. The lingering uncertainty spurred Wex to withdraw its financial guidance for the rest of the 2020 fiscal year.