LONDON (Alliance News) - Optimal Payments PLC Tuesday said it has agreed to buy payment processor TK Global Partners LP for USD210 million in cash and shares, while also snapping up online payments company Global Merchant Advisors Inc for up to USD15 million in cash, in two acquisitions that ramp up its US presence.
In a statement, Optimal Payments said that it is to pay USD150.0 million in cash and USD60.0 million in shares for TK Global, which does business as Meritus Payment Solutions, buying the California-based company from its partners, with the share payments due in equal tranches over four years. Optimal Payments said it will pay USD10.0 million up front for Global Merchant Advisors, with the remaining USD5.0 million depending on performance targets.
The payments company didn't name the sellers of privately-held Global Merchant Advisors, but said it expects both deals to close early in the third-quarter and said they are conditional on one another.
"The US market represents the single greatest expansion opportunity for Optimal Payments. After careful evaluation of a number of potential candidates, Meritus stood out as the perfect choice on all fronts. The company's strong stakeholder relationships, multi-channel sales force, established presence with small and medium businesses in the US and entrepreneurial spirit makes them an ideal acquisition for us," President and Chief Executive Joel Leonoff said in a statement.
Optimal Payments said it expects the acquisitions, which will be funded in part by USD150.0 million in secured credit facilities from Bank of Montreal, to add to earnings. It said the deals will add a merchant portfolio of more than 8,000 US small and medium businesses to its business, a multi-channel US sales force, and partnerships with leading US acquiring banks.
In 2013, Meritus reported USD1.1 million in pretax profit and revenues of USD74.4 million. Net assets at the end of the year amounted to USD1.7 million. In the year prior to that, it reported USD700,000 in pretax profit, and revenue of USD38.3 million. Global Merchant Advisors, on the other hand, reported USD100,000 in pretax profit in 2013, USD8.3 million in revenues, and USD300,000 in net assets.
Optimal Payments said that it was advised by Deloitte Corporate Finance LLC and Stikeman Elliott LLP, while Meritus was advised by William Blair & Company and Manatt, Phelps and Phillips LLP.
Optimal Payments shares were Tuesday quoted at 427.10 pence, up 6.8%.