NCR Makes Inroads Into Payment Processing Via JetPay Buyout
Zacks Investment Research | Dec 06, 2018 10:15PM ET
NCR Corporation (NYSE:NCR) recently announced that it has closed the acquisition of JetPay Corporation (NASDAQ:JTPY) , a provider of end-to-end payment processing and Human Capital Management solutions.
The buyout will enable NCR to add a cloud-based payments platform into its enterprise point-of-sale (POS) terminals for retail and hospitality. The company aims to target primarily the small-medium sized businesses, which are increasingly adopting a unified POS and payment processing platform with this transaction.
The deal will also be instrumental in increasing recurring revenue growth of NCR. Moreover, by accelerating software and services mix, it will be expanding the company’s margins.
Financial Footing
The deal was originally announced on Oct 22, 2018. NCR then stated that it will buy the company for around $184 million through a combination of cash and credit lines.
Notably, the tender offer of $5.05 per JetPay share represents a multiple of 2.9 times the consensus revenue forecast of $63 million for fiscal 2018.
We note that JetPay generated third-quarter revenues of $15.5 million, which increased 14% year over year. Also, Payment services revenues, accounting for the bulk of JetPay's revenues, rose 16% to $11.3 million.
Meanwhile, NCR’s revenues of $1.55 billion in the last reported quarter fell 7% year over year due to a persistent decline in the company’s hardware segment.
NCR anticipates the agreement to be accretive to the company’s earnings within 12 months of its completion.
NCR Corporation Revenue (TTM)
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