ACCC approves Linfox Armaguard, Prosegur merger

The proposed union of two of the country’s biggest cash logistics companies has received approval, with the merged entity expected to start operating in September.

The Australian Competition and Consumer Commission today announced it has granted authorisation of the proposed merger and accepted a court-enforceable undertaking as a condition of the approval.

The merger will result in Armaguard parent company, Linfox, holding 65 per cent while Prosegur Australia Holdings Limited will hold 35 per cent of the total issued share capital of Armaguard.

Both companies offer cash-in-transit services, including cash storage, transport and processing throughout Australia.

Linfox Armaguard said the merged entity would include cash in transit, technical services and ATM networks of Armaguard and Prosegur in Australia.

“A transition project is now under way, and the first day of the merged entity is anticipated to be September 1 2023,” the company’s statement said.

Linfox Armaguard chief executive Mick Cronin said the ACCC had recognised the important role Armaguard and Prosegur play in the ongoing cash circulation in the economy.

“The merger represents a significant and positive development in the management of cash in transit and wholesale cash distribution in Australia, and will secure the immediate future of reliable access to cash for the Australian economy,” he said.

“Cash remains a critical component of Australian society. 

“We anticipate a ‘less cash’ future, not a ‘cashless’ future, and our intention is to support the needs of our customers and the community by building a sustainable network.”

In Western Australia, Linfox Armaguard operates a branch in Canning Vale while Prosegur Australia has an office in North Perth.

The proposed merger between Linfox Armaguard and Prosegur was announced in July last year and was expected to be finalised by the end of 2022, but the ACCC sought further views in December after flagging concerns.

ACCC commissioner Liza Carver today said the consumer watchdog was not satisfied that the proposed merger would not substantially lessen competition after reviewing the transaction.

However, Ms Carver said ACCC was satisfied that the proposed merger was likely to result in a public benefit outweighing the likely public detriment, provided the parties complied with the undertaking.

“We accepted that, without the proposed merger, it was highly probable either Armaguard or Prosegur would withdraw from the declining cash-in-transit market in the near future and this exit could occur very quickly,” she said.

“We were concerned that the rapid exit by either of these two major suppliers could cause significant disruption, including by reducing the availability of cash to their customers, and therefore the public.”

In a statement, the ACCC said its review found that the cash-in-transit industry was in structural decline because to the decreasing use of cash as a payment method across the Australian economy but cash continued to be crucial to some parts.

“The ACCC concluded that the merger lessens some of the likely harms caused by the potential disorderly exit of one of the parties, and allows for a smoother transition to one provider, including by maintaining adequate access to cash,” Ms Carver said.

ACCC said public access to cash was an important consideration for its decision, particularly for access in regional Australia where internet issues could limit electronic payment options.

The court-enforceable undertaking imposes obligations on the combined entity and will be effective for the next three years, ACCC said.

“The undertaking covers a range of obligations which together are intended to provide continuation of services, reduce uncertainty about price and service levels and provide opportunities for other cash-in-transit providers to make use of excess equipment to expand their existing operations,” it said.