Hertfordshire-based payment services provider PayPoint said on Monday it is buying Liverpool-based prepaid gift card and voucher provider Appreciate Group.
The deal values AIM-listed Appreciate at around £83 million, PayPoint said.
PayPoint will pay 33p in cash and 0.019 of a new PayPoint share for each Appreciate share.
Appreciate shareholders will also still receive a 0.8p interim dividend that now has been declared by Appreciate for the six months that ended September 30.
PayPoint said the deal was worth 44p per Appreciate share, a 69% premium to Appreciate’s Friday closing price of 26.05p. PayPoint shares had closed at £5.80 on Friday.
Appreciate shares jumped 58% to 41.25p each on Monday morning in London, while PayPoint shares slipped 4.8% to £5.52.
At completion, PayPoint shareholders will own 95% of the enlarged firm, and Appreciate investors the remaining 5%.
“Whilst the Appreciate Group directors are now confident that Appreciate Group is better positioned for renewed success and that the Appreciate Group has good prospects as an independent AIM-quoted entity, they also recognise that there are significant macroeconomic headwinds which represent a greater financial risk to a small business,” said PayPoint.
“In addition, smaller companies are increasingly constrained by fundamental issues of share liquidity and limited research coverage.”
Paypoint said the deal will deliver attractive returns and “broaden the universe that PayPoint serves and strengthens the client and retailer proposition.”
The company expects the takeover scheme to become effective in the first half of 2023.
Appreciate Group executive chairman Guy Parsons said: “PayPoint’s offer represents an attractive premium for Appreciate Group shareholders providing an opportunity to exit the majority of their shareholdings for cash, whilst participating in the potential upside of the combined Appreciate Group and PayPoint businesses over the long-term.
“We believe that all three segments of the Wider Appreciate Group’s business can prosper under PayPoint’s ownership given PayPoint’s capabilities, and that the acquisition represents a good opportunity for all our stakeholders to benefit from both the immediate cash consideration and the potential future value creation and enhanced capabilities to Appreciate Group’s consumer and corporate clients arising as a result of the combination of the businesses.”
PayPoint chief executive Nick Wiles said: “The PayPoint board believe the proposed acquisition of Appreciate Group provides a compelling opportunity to acquire a highly complementary business with well-established offerings in prepayment savings and the corporate and consumer gift card and voucher sector.
“Appreciate Group brings a well-established technology platform, a strong customer base, a network of popular brand partners and significant headroom for growth across the UK consumer and corporate gifting markets which is valued at more than £8bn in the UK.
“The Acquisition will strengthen our digital payments offering and create an enhanced retail proposition across our partner network, including more than 28,000 convenience stores, delivering additional growth opportunities for the Enlarged Group.
“More specifically, the proposed acquisition would jointly target growth in three broad areas: prepayment saving through Park Christmas Savings to support customers with budgeting tools for Christmas and other events; an enlarged full-service offering for gifting, employee rewards and benefits to Appreciate Group’s corporate clients; and an extended consumer gifting network for the Love2shop brand.
“PayPoint’s Board believes that Appreciate Group is an earnings enhancing acquisition that will deliver attractive returns for shareholders.”
Reporter: Tom Budszus
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