Free audio stream, including stories that are padlocked on our site. Listen on any device, anywhere. Updated twice daily. The audio stream takes several seconds to start on Android devices.Launch Radio player
Smartpay, which provides retailers with payments and transactions services, has agreed to buy eftpos terminal provider Viaduct for $16.3 million in cash and shares – a transaction representing almost a third of Smartpay's value.
The Auckland-based company will pay $14 million in cash and $2.3 million in shares for Wellington-based Viaduct's eftpos terminal fleet, making Smartpay the biggest operator in terms of terminal numbers and merchants serviced, it says in a statement.
The cash component will be funded through extra debt and a $3.7 million private placement of new shares to institutional and sophisticated investors.
The placement and shares issued to Viaduct's owners are priced at 15 cents apiece, a 14 percent discount to Smartpay's 17.5 cents trading price. The acquisition, which is valued at 31 percent of Smartpay's market capitalisation, will be put to shareholders in January.
"Our emphasis in the New Zealand market is to strongly grow our eftpos position and to deliver innovative and competitive services via an established retail footprint," managing director Bradley Gerdis says.
The company would also look beyond the New Zealand market.
The deal means Smartpay has to delay its secondary listing on the ASX, which was originally planned for this calendar year. The company now expects to list across the Tasman in the second quarter of 2013.
Viaduct founders and majority shareholders Marty Pomeroy and Mark Unwin will join Smartpay in senior executive roles, and will each be entitled to long-term incentive bonuses of two million options to subscribe to shares at 20 cents apiece, exercisable from 2016, and a further two million options to subscribe at 30 cents a share exercisable from 2018.
The acquisition is expected to contribute annual revenue of some $6 million and $3 million in earnings before interest, tax, depreciation and amortisation.
Last month, Smartpay says it had annualised sales of $17 million and earnings before interest, tax, depreciation and amortisation of $7.4 million after the first-half of the 2013 financial year.