Irish electronic payments group Alphyra has announced plans to merge with UK-listed ATM operator Cardpoint in a move that will see the enlarged entity floated on London's Alternative Investment Market (Aim) in December.
The deal is effectively a reverse takeover by Alphyra of Cardpoint, with the Irish company owning 59.05 per cent of the merged entity, which is to be called Payzone.
Alphyra boss John Nagle will become Payzone's chief executive and the new company will be based in Dublin. John Williamson, Alphyra's head of finance, will take up the role of chief financial officer with Payzone. Cardpoint chairman Bob Thian will assume the chairmanship with Payzone.
The enlarged group will operate the biggest consumer electronic payments network in Europe, processing 550 million transactions with a value in excess of €10.2 billion for banks, utility providers, mobile operators and other clients in 21 countries. Reports yesterday suggested that the merged entity would have an enterprise value of €800 million, but informed sources placed the current value of the new entity at €350-€400 million.
No cash will change hands as part of the transaction. Payzone will issue shares that will be swapped for existing stock in Alphyra and Cardpoint.
Alphyra's management team and Balderton Capital, which owns 68.5 per cent of the Irish payments group, will both take cash off the table when Payzone floats on Aim by selling half of their shares in the company.
Their windfall will depend on the valuation placed on the shares at the time of the listing.
Following this move, Mr Nagle will own 9.9 per cent of Payzone while Balderton, of which Irishman Barry Maloney is a director, will have a 39.22 per cent stake.
Alphyra was founded by Mr Nagle in 1989 to provide maintenance services for business telephone systems. It has since grown into one of Europe's biggest electronic payments groups.
Formerly known as ITG, it floated on the stock market in 1997 before delisting in January 2003 when Mr Nagle led a €112 million management buyout.
Alphyra had gross turnover of €3.4 billion in the year to the end of December 2006, from which it earned a gross profit of €77.8 million. The company recorded an operating profit of €3.4 million. A hefty interest bill of €13.8 million resulted in Alphyra recording a loss for the year of €10.1 million.
Cardpoint is based in Blackpool and operates 6,000 ATMs in the UK and Germany. It listed on Aim in 2002 and has a market cap of £105 million.
The UK group made a pretax loss of £16.5 million on turnover of £42.3 million last year.
Payzone will have about 800 staff. Mr Nagle said there would be significant cost synergies involved, particularly in the UK.
The current weak global stock markets will pose a challenge to Mr Nagle's plans to float Payzone in December.
"That's a worry with any IPO," he said. "You're are at the whims of the market at the time you float."
