Euronet Worldwide is to acquire UK-based HiFX, a provider of online initiated international payments and foreign exchange services, for GBP145m or approximately USD242m.
Twenty five per cent of the purchase price will be paid in shares of Euronet stock and the balance in cash.
Euronet's existing revolving credit facility will be used to fund a portion of the cash consideration.
The acquisition allows Euronet to offer an account-to-account international payment service to high-income individuals and small-to-medium sized businesses, complementing Euronet's existing consumer-to-consumer money transfer business.
HiFX offers affordable exchange rates, security and a multi-channel platform which allows customers to make transfers, track payments and manage their international payment activity online or through a customer service representative. In 2013, HiFX transferred more than USD15bn for customers in the UK, Australia, New Zealand and Europe.
"HiFX is a fast-growing leader in the cross-border payments sector. Their online presence, affordable rates, and deep knowledge of foreign exchange markets and account-based transfers will complement Ria, our consumer-to-consumer money transfer brand," says Michael J Brown, chairman and chief executive officer of Euronet Worldwide. "The acquisition of HiFX gives us access to the 9.9 billion payment transaction market, which is dominated by more traditional financial service providers. The strength of the combined companies will allow both HiFX and Ria to broaden their product offerings, extend their geographic reach, and improve their online platforms, providing clients with a faster, easier to use and more convenient customer experience – in turn, increasing our market share in the fastest growing portion of the international payments space."
The HiFX management team brings significant foreign currency and account-to-account money transfer knowledge. They delivered approximately USD64m in revenue and USD18m in adjusted EBITDA in 2013, which have grown at compounded annual growth rates of 10 per cent and 25 per cent, respectively, over the last three years. HiFX will continue to be managed by current CEO Matthew Knowles, who will report to Juan Bianchi, managing director of Euronet's money transfer segment. Euronet expects to integrate HiFX into its money transfer segment and retain HiFX's 200 employees worldwide.
"Euronet is a truly global e-payments company and we share many common values. Their industry leading money transfer expertise, existing bank relationships, global market entry expertise and strong balance sheet give us enormous scale to realise our ambitions for the business and continue to build a global foreign exchange company based on consistent bank-beating exchange rates, innovative technology and world-class customer service," says Knowles.
Euronet expects the acquisition, which is subject to customary regulatory approvals and closing conditions, to close in the second quarter. Euronet estimates that the acquisition will contribute approximately 15 cents to Euronet's annual cash earnings per share in the first full year under Euronet ownership.
