(Adds details, comments from analysts, CEO; updates share
By Aastha Agnihotri
July 1 Online money transfer company Optimal
Payments Plc said it would buy two U.S.-based online
payment firms for $225 million to expand its operations in North
America, sending its shares up as much as 9 percent.
Optimal said it would buy Santa Ana, California-based TK
Global Partners LP for $210 million, with $150 million in cash
and $60 million of shares over four years. TK Global is doing
business as Meritus Payment Solutions.
Optimal also said it would pay up to $15 million in cash to
acquire Los Angeles-based Global Merchant Advisors Inc.
"The businesses diversify Optimal's revenue away from
gaming, its largest client, and into native U.S. merchants. They
have no exposure to gaming," Canaccord Genuity analysts said in
The analysts said the companies have a proven U.S. sales
force. Optimal has been accessing the U.S. market through its
Canadian sales team.
Optimal Payments Chief Executive Joel Leonoff told Reuters
that the company was keen on expanding into new U.S. geographies
"We will continue to look and try and find deals that are
immediately accretive to shareholders and bring expansion values
to new territories for us," he said.
Optimal Payments, which has a market value of more than $1
billion, received Visa Europe and Mastercard Europe's principal
membership earlier this year, allowing it to process credit card
payments without paying fees to third parties.
The company said it would fund the acquisitions, which are
expected to close in the third quarter, through credit
facilities of $150 million from the Bank of Montreal.
The deals would add to earnings immediately.
"Both businesses are U.S. based, a major focus for Optimal
given the opening up of that market for their existing
businesses, and are across a range of verticals," Barclays
Capital analysts said in a note.
The company, which has been expanding its operations in
Europe, said in March it would continue to assess merger and
acquisition opportunities in the region and the emerging
regulated U.S. gaming market.
Optimal Payments reported in April a jump in pretax profit
for 2013 as sales soared in its high-margin Neteller e-wallet
business, which helps online gamblers deposit money before
Shares in Optimal Payments were up about 6 percent at 423.00
pence at 1300 GMT, making the stock one of the top percentage
gainers on the London Stock Exchange.
(Editing by Gopakumar Warrier)