Perth based Stargroup look set to add the missing link to their burgeoning Automatic Teller Machine business after signing an MOU to buy the ATM machine switching, settlement and processing assets of 45 year old company Indue Limited.
The highly strategic move will also see Stargroup take over Indue’s ATM telecommunications services and importantly, they will also take over Indue’s ATM machine wholesale business allowing them to lever their existing part ownership of Korean ATM machine manufacturer Neo ICP.
The bold move will see Stargroup become a totally vertically integrated business that can pretty much offer all services in the ATM machine business chain.
The company will now be able to sell ATM machines to a huge pool of other operators, operate machines themselves, run telecommunications services for them and settle the backend financial transactions and bank transfers of monies that are withdrawn from them.
Stargroup said consideration for the deal would be $6.5 million cash fully funded by debt, with the acquisition expected to boost annual revenues by $4.1m and EBITDA by $1.7m.
Once complete Stargroup would provide ATM switching services for 70 other ATM machine operators, 1700 ATMs and 1350 modems, processing about 12m transactions each year in total.
The deal would further diversify Stargroup’s current business offering and builds on its push into the EFTPOS space after recently announcing it would distribute next-gen EFTPOS terminals across Australia and New Zealand for major Swedish EFTPOS player, West International AB.
“This is another significant transaction for Stargroup and Indue is a market leader in ATM switching, processing and settlement services and has been for some time,” Stargroup CEO Todd Zani told the ASX.
“I have had a long term relationship with Indue and they provide industry best settlement and processing services and this is an excellent acquisition of a complementary business for Stargroup.”
Stargroup hopes a deal can be formalised at the end of October, with the acquisition to be wrapped up by the end of December, according to management.
Earlier this month, Stargroup dual-listed on the Frankfurt stock exchange and also inked a deal with Goldfield’s Money to place $15m of their excess cash into Stargroup’s 350 ATM machines for at least the next 3 years.
Stargroup is Australia’s only listed ATM company deploying ATM’s in Australia and was born out of the merger with ICash in 2015. It is currently implementing a nation-wide ATM rollout that has been one of the key drivers for revenue surging every quarter since March 2014.
Stargroup sees the Indue deal as another big positive for its ATM division, tipping the acquisition to lift annualised revenue in the division from $7.5m to $11.6m before marching on to $15m next financial year with further organic rollouts.
By Matt Birney
