EML Payments (ASX: EML) has announced a capital raising to fund a $423 million acquisition based in Ireland.
EML Payments develops financial technology to provide solutions for payouts, gifts, incentives & rewards and supplier payments. It issues mobile, virtual and physical cards to some of the largest corporate brands, processing billion of payments each year, managing more than 1,400 programs across 23 countries in North America, Europe and Australia.
EML Payment’s Irish Acquisition
EML has announced that it’s going to acquire Irish based business Prepaid Financial Services, which is a provider of ‘white label’ payments and banking as a service technology.
The acquisition will cost $423 million, which represents 17.5 times the FY20 EBITDA (click here to learn what EBITDA means).
EML management think there are annual synergies of $6 million that can be achieved with the acquisition, which would mean the acquisition is priced at 14 times the EBITDA after implemented synergies.
There’s also a $103 million payment based on PFS reaching agreed annual EBITDA targets in the three years after completion. The deal could add 25% to underlying profit / earnings per share (EPS).
After the acquisition EML would become one of the largest prepaid and digital banking fintech businesses in the world with around $18 billion of gross debit volume in FY20.
EML Managing Director and CEO Tom Cregan said: “The acquisition of PFS continues to consolidate EML’s market position as one of the largest FinTech enablers in digital banking and pre paid globally.
“PFS is highly complementary to EML’s existing solutions suite and adds digital banking and multi-currency offerings to our existing suite, while expanding our global market footprint and ability to cross-sell PFS’ solutions.”
To fund the acquisition, EML will raise $183 million from shareholders (where investors can be one new EML share for every five they own) and raise $67 million from institutional investors. The raising price will be $3.55, which is a 7.3% discount to the last closing price.
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