Emerchants Limited (ASX:EML) is to acquire Store Financial...

Emerchants Limited (ASX:EML) is to acquire Store Financial Services UK (SFUK), a leading provider of prepaid stored value programs in 9 European countries, including the U.K.

Consideration is A$24.9 million, which equates to 9.3x pro forma EBITDA, and is comprised of 50% cash and 50% Emerchants scrip to the vendors at $0.50 per share.

The acquisition provides Emerchants with a platform to launch the reloadable business into Europe, leveraging SFUK’s established and profitable non-reloadable business.

Importantly, it is anticipated to be immediately earnings accretive to Emerchants.

Cash consideration is to be funded through a $14 million institutional placement, incorporating $1.5 million for recovery of transaction costs.

SFUK has grown to become one of Europe’s largest shopping mall gift card processors and program managers, with over 100 programs in place, and is affiliated with Store Financial Systems, the world’s largest provider of shopping mall prepaid programs.

SFUK’s business has been profitable since 2012 and in CY2015, the first 12 months post-acquisition, Emerchants anticipates SFUK will generate revenues of AU$8.6 million and contribute AU$2.7 million in EBITDA to the group’s results.

Pre-transaction, Emerchants is valued at around $62 million.