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Sydney-based Pemba Capital makes takeover proposal for Smartpay at 11% premium

Thursday 31st August 2017

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Smartpay Holdings, the listed payment terminal supplier, is considering a proposal from Pemba Capital Partners which would see the Sydney-based investment firm buy all its shares at an 11 percent premium.

The company has received the "preliminary, indicative, non-binding and conditional proposal" from Pemba, which is offering 23.5 cents per share for all of the shares, it said in a statement to the NZX. The shares last traded at 21 cents before the offer and rose 4.8 percent to 22 cents when trading on the NZX opened this morning. They have gained 24 percent this year. The proposal is subject to due diligence and the majority of shareholders engaging with Pemba.

"The board of Smartpay notes that there is no certainty that the indicative proposal will result in a binding offer, what the final terms of any offer will be, and whether or not that offer (if it occurs) will be recommended by the Smartpay board," it said. "Smartpay shareholders do not need to take any action in response to this indicative proposal and the Smartpay board will update shareholders as and when appropriate. The Smartpay board is and remains committed to acting in the best interests of, and maximising value for, all Smartpay shareholders."

In its annual results released in May, the company reported net profit jumped to $2.2 million from $200,000 in the previous year, as revenue rose 7 percent to $21.8 million. In the year to March 31, it launched new technology in the New Zealand market, increasing revenue and profit from the local segment, while it saw a reduction in Australian taxi revenue due to continued disruption though that was partly offset by an increase in terminal sales.

The company said in May that it foresaw positive growth in 2018 driven by its planned implementation of "acquiring capability" in Australia, and it intended to be able to offer Eftpos merchants an acquiring facility alongside its terminal offering.

"Completion of this project will enable Smartpay to participate in the transactional fee pool generated by our terminals which we believe will offer margin accretion and create further opportunities for growth in both our Eftpos terminal network and ancillary products and services which we can only offer when we participate directly in the revenue flow through our terminals," it said. "This has been a lengthy project which we remain focused on implementing this year." 

The company reduced net debt to $24 million from $24.8 million at the end of the first half, and forecast further debt reduction in the current financial year. Its annual meeting will be held in Sydney on Sept. 26. 


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