Monday , March 25, 2019

NCR To Take a Direct Role in Payments With its Pending $184 Million Acquisition of JetPay

Best known for its ATMs, NCR Corp. has long been close to the point-of-sale payment business with its software products such as Retail One, Aloha, and NCR Silver, and its hardware for retailers and the hospitality industry that includes self-checkout systems for grocery stores. Now NCR is about to dive into merchant acquiring with its pending deal to buy Allentown, Pa.-based processor JetPay Corp. for $184 million in cash.

Atlanta-based NCR’s offer of $5.05 per JetPay share, announced Monday, is 138% higher than the stock’s $2.12 Friday close. The offer also represents a multiple of 2.9 times stock analysts’ consensus 2018 revenue forecast of $63.4 million for JetPay, NCR said. The acquisition, which has been approved by both companies’ boards, is expected to close by year’s end pending regulatory approvals.

JetPay serves about 10,000 merchants, and it has relationships with about 200 independent sales organizations, independent software vendors, value-added resellers, and financial institutions. Last year JetPay processed $5.3 billion in payment card volume and $5.2 billion in electronic-check volume, according to an investor presentation. JetPay also has a division that provides payroll processing and human-resources services that processed $6.8 billion in payroll volume in 2017.

The acquisition by NCR “dramatically accelerates our capabilities,” says JetPay CEO Faro.

“The acquisition of JetPay is a key, strategic initiative that will enable NCR to create a full, end-to-end integrated payments offering for its enterprise-wide POS customers,” NCR president and chief executive Michael D. Hayford said in a statement. “Enabling payments as part of our transactions is part of our long-term strategy to create integrated value for our clients.”

The deal comes not even a month after JetPay named 27-year payments-industry veteran Laurence L. Stone as chairman, succeeding Bipin C. Shah, who had been chairman since 2010. Stone is a major stockholder in JetPay and has agreed to tender his shares to NCR, as has another big investor, the Flexpoint Ford private-equity firm, NCR said.

JetPay vice chairman Peter Davidson tells Digital Transactions News that NCR’s offer came after JetPay began talking with potential partners that could provide expansion capital. “We were reaching out to the market, looking for investment opportunities,” Davidson says.

JetPay has a full-scale front-end and back-end processing system fully capable of handling the volume NCR’s massive reach could bring, according to Davidson. “We are a very small version of First Data,” he says. “We don’t need to re-architect the system to add scale.”

Davidson expects JetPay will continue as a standalone operation with its management and staff in place. The JetPay brand will continue for now, he says.

In a statement, JetPay CEO Diane Faro said her company “has always focused on taking great care of our customers, creating value for our stockholders, delivering innovative solutions, and expanding our market reach. This combination dramatically accelerates our capabilities across these initiatives. NCR’s global footprint, brand recognition, and track record of innovation will help us accelerate our strategic objectives and create even more value for our customers.”

News of the deal lifted JetPay’s stock 134% late Monday morning to $4.97.

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