The Bob Browning-led investment company Australasia Consolidated has made its first acquisition, with the purchase of John Battley's pre-paid transaction services business eMerchants for up to $28 million.
The Bob Browning-led investment company Australasia Consolidated has made its first acquisition, with the purchase of John Battley's pre-paid transaction services business eMerchants for up to $28 million.
Australasia said in a statement today it would raise a minimum of $10 million through a share placement at 17 cents per share to new and existing shareholders to fund the transaction and to develop new software applications and increase eMerchants' sales and marketing presence.
Terms of the deal include the issue of up to 152.5 million Australasia shares to eMerchants' vendors, and $2.5 million in cash.
Based on a share price of 17 cents, Australasia valued the deal at $28 million, however the stock is currently trading at 20 cents.
The issuing of most of the shares is subject to performance targets being met.
eMerchants is Australia's largest issuer of pre-paid financial cards, ranging from reloadable cards to single-store gift cards.
Mr Battley, who also runs Nedlands business Globetrotter Corporate Travel, bought into the Brisbane-based eMerchants in 2008, invested more than $3 million in the company over the next two years and moved its headquarters to Perth.
Mr Browning said the acquisition delivered optimum value for both companies.
The pre-paid and debit card market grew at a combined 19.9 per cent over the past five years, according to Euromonitor International 2011.
"Australasia's mission is to acquire and help grow enterprises which hold a leading edge in a strong growth market," Mr Browning said.
"Through ingenuity and design, eMerchants has built a commanding presence in the pre-paid card market in Australia.
"The acquisition is a win-win for our shareholders, with early stage entry with a market leader in a strong growth industry, and for eMerchants, which will benefit from the strategic management input and guidance Australasia can provide.
"This acquisition sets a strong platform for us to further pursue other opportunities in the financial services sector."
Mr Browning said Australasia had evaluated a range of acquisitions before finalising on eMerchants.
"Based on its position in the market, a determined and incentivised team including the lead designer, and the potential upside of this industry, we determined this as being the best opportunity for our shareholders and sets a strong precedent for Australasia's future acquisition benchmarks," he said.
Australasia said all key staff were contracted to say with eMerchants on performance based incentives.
Also, Australasia said eMerchants founder Mr Battley would join its board as executive director, with Mark Barnaba, John Toms and John Willing also being appointed as non-executive directors.
Non-executive chairman John Terpu will remain on the board, alongside managing director Mr Browning and executive director Bryant Plavsic.
