* To buy APT for cash from Great Hill Partners
* Deal to be dilutive to GAAP EPS in FY13
Aug 15 Global Payments Inc agreed to buy
Accelerated Payment Technologies for $413 million from private
equity firm Great Hill Partners as the payment processor looks
to boost its falling margins in the face of increasing
Margins at the company, whose systems were targeted by
hackers earlier this year, have fallen over the past few years.
In 2012, consolidated margin was 13.9 percent, down from 17.8
percent a year earlier.
The deal seems more like a strategic partnership to boost
margins and earnings in the future than an attempt to hold up
against competition, said analyst Meghna Ladha of Susquehanna
Financial Group, which makes a market in the company's shares.
Accelerated Payment Technologies processes online
transactions for small and mid-sized merchants.
Payment processors are facing more competition as startups
gain momentum. Square Inc, the 2-year-old startup led by Twitter
co-founder Jack Dorsey, is emerging as a possible threat to
companies like Global Payments.
Starbucks Corp is already looking to use Square to
process payments at its coffee shops in the United States.
Global Payments has been making strategic investments to
grow its business. It said in July it would buy the remaining 44
percent of its payment processing joint venture with HSBC
Holdings for $242 million.
"This (the acquisition) could limit near-term use of the
recently authorized $150 million buyback and the purchase price
appears quite full," David Koning of Robert W. Baird & Co wrote
in a note to clients.
The company had cash and cash equivalents of about $781
million at the end of May.
While the financing details of the deal were not mentioned
in the statement, analysts at brokerage Jefferies said they
expect the acquisition to mostly be financed through the
company's credit facility.
The company has outstanding debt of $800 million, according
to Thomson Reuters data.
Global Payments expects the deal to hurt its net earnings
per share this year, but add to its cash operating margins on an
Shares of the company were down more than 1 percent at
$41.35 on the New York Stock Exchange on Wednesday.