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Stargroup CEO and Executive Chairman Todd Zani

Stargroup executes landmark acquisition deal

ASX listed financial payments and ATM machine operator Stargroup, has bolted $1.7m to its bottom line after executing a hotly-anticipated asset sales agreement with high margin Australian ATM machine service provider Indue.

Last week Stargroup executed an agreement to acquire Indue’s ATM machine switching, settlement, processing, telecommunications and reseller assets.

Indue provides services to around 70 ATM machine operators involving some 1,700 ATMs, 1,350 modems and the company processes 12 million transactions per annum.

Stargroup appear to have bought the assets well, paying a multiple of just 3.8 times EBITDA in a non-diluting, debt funded, $6.5m deal that may even throw up a few synergies with Stargroup’s existing business to further improve the purchase multiple.

Stargroup have paid around 5 times EBITDA in the past for other ATM machine businesses which, on the surface at least, makes this deal look like it was well negotiated by Stargroup management.

Indue’s business, which is decades old, shows extraordinarily high margins with an EBITDA to sales ratio of over 40%.

The deal will see Stargroup add $1.7m in EBITDA to their annual set of accounts for an additional turnover of $4.1m per annum.

The company says its annualised revenues from the ATM division will jump from $8 million to $12.1 million a year post the acquisition with that number  predicted to grow to around $18 million organically in the 2018 financial year.

Stargroup Chief Executive Todd Zani said: “This is an important acquisition and further vertically integrates our ATM business which has been through a truly transformational year.”

We look forward to completing this acquisition and accelerating our blue sky EFTPOS business opportunities in 2017.”

The positive update to shareholders from Stargroup comes after a stunning run of revenue growth for the Todd Zani led company that has seen it notch up 11 consecutive quarters of revenue growth, with the company expecting to report another record-making quarter in December.

Stargroup offers two major products, ATMs and EFTPOS terminals, and currently has more than 350 ATMs on the street across Australia. In addition, the company has an 11 per cent interest in NeoICP Korea Inc, which builds ATMs and casino settlement solutions.

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Stargroup (STL)

Share Price

Closing price for the last 90 trading days
Source: Morningstar

Total Shareholder Return as at 29/06/18

1 year TSR5 year TSR
4thAdvance NanoTek1986%102%
302ndGoldfields Money27%5%
496thWestStar Industrial-4%-54%
505thStargroup-6%-11%
767thCarnegie Clean Energy-61%-6%
722 WA (and selected non WA) listed companies ranked by 1 year TSR relative to other companies with similar revenue
Source: Morningstar

Share Transactions

09/08/17
$12k Bought
27/06/17
$0 Other
27/06/17
$35k Bought
Total value as at the date of the transaction
Source: Morningstar

Revenue

87th↑Stargroup$563k
96th↑Carnegie Clean Energy$5.3m
97th↓Advance NanoTek$5.1m
100th↑WestStar Industrial$4.6m
101st↓Goldfields Money$4.2m
239 listed industrial companies ranked by revenue.
Source: Morningstar

Remuneration from Stargroup

1385thJay Kim$29k
Ranked by total remuneration from all listed WA companies

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