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Euronet Acquire Germanys Largest Top-Up Processor

Saturday 22 November 2003 12:01 CET | News

Euronet has executed an agreement on November 20, 2003 to acquire the German company transact Elektronische Zahlungssysteme GmbH (Transact) in consideration for ?15.0 million (approximately $17.8 million) in cash and 643,048 shares of Euronet common stock.

Transact is one of the leading independent electronic payments processors and the market leader in processing of prepaid mobile airtime top-up services in Germany, with a market share of nearly 60 percent of electronic top-up transactions. Euronet also announced that, following the signing of the Transact acquisition agreement, Euronet closed a $20.0 million private placement of common stock with an accredited institutional investor (1,131,363 shares at a purchase price of $17.68 per share). Substantially all of the proceeds from the private placement will be used to purchase the shares of Transact. Transact, which was founded in 1996, specializes in payment processing services and software for EFT and prepaid mobile phone transactions on point of sale (POS) terminals, as well as retailer till systems. Additionally, Transact offers a line of proprietary GPRS-based POS terminal products. After commencing implementation of electronic mobile phone top-up solutions in 2001, Transact quickly became the German market leader in processing electronic purchases of prepaid mobile airtime. The company currently supports top-up purchases at more than 8,000 of their installed base of over 20,000 POS terminals in approximately 18,500 retail locations. Transact has agreements or top-up supply relationships with all of the large mobile service providers in Germany, including Vodafone, T-Mobile, O2, and E-Plus, as well as with a number of virtual mobile service providers such as Mobilcom, either directly or via agreements with distributors of mobile airtime electronic vouchers. Transact also has agreements or relationships with the major distributors of airtime in Germany, such as Lekkerland, DTV and Telexpress, as well as with major retailers such as Shell, DEA, Jet, AGIP, ESSO, Total Fina Elf, PKN Orlen, and Karstadt. In 2003, according to Transacts unaudited financial information, Transact has experienced transaction growth of approximately 41 percent per quarter. Based on its most recent three months, Transact generated net revenue, on a recognition basis consistent with Euronets other prepaid processing revenues, of approximately $3.3 million and EBITDA of approximately $1.1 million, according to its unaudited financial information. Also for that same three-month period, Transact processed approximately 8.5 million transactions. Taking into account the acquisition of Transact together with the related funding, Euronet expects that Transact will contribute approximately $0.07 to $0.10 per share to its fully diluted earnings per share for the year 2004. This estimate is subject to refinement, if any, resulting from purchase price allocation and the related amortization, and it is based on current and projected financial performance of Transact, as determined from financial information provided in the transaction. Euronet will closely monitor the results of Transact and update its expectations as appropriate. Germany is one of the largest prepaid markets in Europe. According to mobile operator data and EMC, a leading research group, more than 70% percent of Germanys population of 82 million subscribes to mobile phone service. Of those users, more than 50% percent have prepaid services, spending more than $4 billion annually. In established markets like Germany, top-up growth comes primarily from the mobile operators shift from scratch-off cards to electronic distribution and from the addition of new retailers and POS devices. According to Transact estimates, in the third quarter 2003 about 25% percent of the prepaid airtime in Germany was sold electronically. Transact estimates that it has processed approximately 60% of these electronic top-ups in Germany. Under the Transact acquisition agreement, Euronet will purchase 100% of the shares of Transact for a purchase price of ?15.0 million (approximately $17.4 million) in cash and 643,048 shares of Eu


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Categories: Payments & Commerce | Payments General
Countries: World
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