Paysafe Group Closes USD 470m Acquisition of Merchants' Choice Payment Solutions.
25 August 2017 - UK-based payment solutions company Paysafe Group plc (LSE: PAYS)has closed the acquisition of substantially all the assets of Delta Card Services Inc., the holding company for Texas, US-based payment processor Merchants' Choice Payment Solutions, the company said.
MCPS is a data-focused full service payment processor for merchants and high-volume independent sales organisations in North America.
The firm delivers card processing services to approximately 60,000 merchants in 50 states and processing over USD 14bn in sales volume annually, MCPS is a provider to small and medium-sized businesses.
Paysafe said the acquisition of MCPS expands its processing scale and product-set for ISOs and merchants in North America.
The addition of point-of-sale activities to Paysafe's processing division significantly strengthens its ability to provide processing for POS, online and order ahead payments all under a single real-time consolidated analytics platform.
Paysafe said the consideration of USD 470m, which is payable in cash, will be funded by a USD 380m Incremental Loan Facility drawn under the existing senior facility agreement, underwritten by BMO Capital Markets, Deutsche Bank and other syndicate banks, plus USD 90m from existing cash funds.
MCPS reported revenue of USD 446m and earnings before tax of USD 18.4m in the year ended 31 December 2016. At that date, MCPS had gross assets with a value of USD 90.4m.
Meritus, a Paysafe Processing subsidiary, is an existing partner of MCPS. A portion of MCPS' revenue will therefore be treated as inter-company in the combined business.
In addition, ahead of the acquisition, MCPS is acquiring merchant portfolios from some of its ISOs, which will result in lower third-party fees payable to partners from the date of the acquisition.
Had MCPS been owned by Paysafe for all of financial year 2016 and the merchant portfolios acquired at the start of that year, pro-forma consolidated 2016 revenues for MCPS excluding inter-company transactions would have been USD 329m, an increase of 6% compared to 2015.
Pro-forma gross profit of MCPS would have been USD 72m. Pro-forma adjusted EBITDA1for MCPS would have been USD 49m, which represents a pro-forma EBITDA margin of 15%.
The combination with MCPS is expected to result in annual cost synergies of approximately USD 7.5m, in addition to certain revenue synergy opportunities.
On a 2016 pro-forma basis, Paysafe's revenue exposure to online gambling would have fallen from approximately 46% to 35%, and revenue from the Asia Gateway business from approximately 13% to 10%.
BMO Capital Markets acted as financial adviser to Paysafe and Stikeman Elliott LLP served as legal counsel.
Sector: Banking/Financial Services
Target: Delta Card Services Inc
Buyer: Paysafe Group
Deal size in USD: 470m
Buyer advisor: BMO Capital Markets , Stikeman Elliott ,
|Printer friendly Cite/link Email Feedback|
|Publication:||M & A Navigator|
|Date:||Aug 25, 2017|
|Previous Article:||International Hotel Properties Pitches Shareholders Regarding Redefine International Deal.|
|Next Article:||Ambassador Financial Advises Kish Bank on Acquisition.|