JOHANNESBURG, Sept. 16 /PRNewswire-FirstCall/ -- Net 1 UEPS
Technologies, Inc. (Nasdaq: UEPS) (JSE: NT1) ("Net1" or the
"Company") today announced that it has agreed to acquire 98.73% of
KSNET, Inc. ("KSNet"), a leading Republic of Korea ("Korea")
payment processor, for a purchase price of approximately
270 billion Korean won ("KRW"), or
approximately $233 million based on
current exchange rates. The Company will fund the transaction
utilizing a combination of cash reserves and new debt facilities.
Net1 expects the transaction to be immediately accretive to fiscal
2011 fundamental earnings (which is a non-GAAP measure). The
transaction is expected to close in the second quarter of fiscal
2011.
KSNet is the fastest growing and most profitable payment
solutions provider in Korea, has the broadest product offering in
the country, a base of approximately 200,000 merchants and an
extensive direct and indirect sales network. Over 90% of KSNet's
revenue comes from the provision of payment processing services to
merchants and card issuers through its Value Added Network ("VAN").
Over the past two years, KSNet's transaction processing volume has
increased at a 24% CAGR, and reached 1.4 billion transactions
during calendar year 2009.
Net1 believes that the acquisition of KSNet will strengthen its
long-term growth platform, and is strategically important for the
following reasons:
- Demonstrated ability to generate strong growth and cash flow
generation: KSNet has delivered impressive revenue and earnings
growth, and cash flow conversion since 2007, despite the global
financial crisis. During the twelve months ended June 30, 2010, KSNet generated revenue of
KRW 101 billion (approximately
$86 million), a year-over-year
increase of 23% and grew 28% in EBITDA;
- Sustainable growth profile on a standalone basis:
According to the Bank of Korea, the total number of card
transactions in Korea grew at a 23% CAGR from 2007 through 2009.
KSNet is the fastest growing and most profitable transaction
processor in Korea, driven by solid growth in payment card adoption
and usage, a large and well established sales force, innovative
personal income tax incentives which encourages use of payments
cards, and expansion into higher growth adjacent markets with its
banking VAN and payment gateway businesses;
- Diverse product offering: KSNet is the only total
payment solutions provider offering card VAN, payment gateway and
banking VAN services in Korea. Net1 believes that this diverse
product offering differentiates KSNet from other Korean payment
solution providers, and allows it to cross-sell its products across
its customer base. We believe this diverse offering strengthens its
position with its sales agents by providing additional revenue
sources to them;
- Multiple synergistic opportunities for Net1: Net1
management has identified three key areas to drive revenue
synergies:
- KSNet's core card VAN business is similar to Net1's South
African EasyPay operation, thereby creating an opportunity to
incorporate new offerings such as the value-added services offered
by EasyPay;
- Korea is widely regarded as one of the more advanced users of
mobile technology in the world and given KSNet's well-established
relationships with mobile operators, financial institutions and
retailers and its growing e-commerce processing business, Net1 has
an attractive platform to potentially introduce its Mobile Virtual
Card technology;
- KSNet's presence in Korea provides an established base in
Asia for Net1's business
development activities in the region;
- Revenue and earnings diversification: The acquisition of
KSNet meaningfully diversifies Net1's revenues and earnings outside
its core South African operations. On a pro-forma basis for fiscal
2010, KSNet would represent approximately 30% of Net1's revenue;
and
- Expansion of expertise and management team: Increase in
the depth and diversity of the Net1 management team with the
addition of experienced executives in Asia. The KSNet management team has
significant experience and relationships within the Korean
transaction processing sector as well as across multiple industries
like banking, telecommunications, retail, etc.
"This transaction marks a key milestone for Net1, and fits
squarely into our long-term vision of globalizing the Company,
penetrating certain key growth markets, while also diversifying our
business internationally," said Dr. Serge
Belamant, Net1's Chairman and Chief Executive Officer.
"KSNet offers us the opportunity to further capitalize on its
position in a high growth market, advance its newer businesses in
banking VAN and payment gateways, as well as introduce key products
and services from Net1's EasyPay and Mobile Virtual Card offerings,
providing a comprehensive and differentiated solution to
cardholders, financial institutions and merchants in Korea."
Dr. Belamant added, "Equally important, KSNet's sustainable growth
platform meaningfully enhances our geographic, customer and product
diversification strategy. The management team and staff bring a
wealth of experience in the Korean transaction processing market
and we expect them to play a key role in driving growth for our
combined company."
Net1 will host a conference call to discuss the acquisition on
Friday, September 17, 2010, at
9:00 a.m. Eastern Time. To
participate in the call, dial 1-800-860-2442 (U.S. only),
1-866-605-3852 (Canada only),
0-800-917-7042 (U.K. only) or 0-800-200-648 (South Africa only) five minutes prior to the
start of the call. Callers should request "Net1 call" upon dial-in.
The call will also be webcast on the Net1 homepage, www.net1.com.
Please click on the webcast link at least 10 minutes prior to the
call. A webcast of the call will be available for replay on the
Net1 website through October 15,
2010.
Net1 was advised by Standard Chartered Bank and Yulchon and DLA
Piper US LLP provided legal counsel.
About KSNet
KSNet services a broad range of industries in Korea, including
credit card, retail and wholesale merchant, financial institutions,
governmental organizations, utility companies and e-commerce
businesses. It offers payment processing solutions including
payment card and banking value added networks ("VAN"), payment
gateways, cash receipt, purchase cards and point cards. It has a
diverse merchant base and processed over 1.4 billion transactions
in 2009.
About Net1 (www.net1.com)
Net1 provides its universal electronic payment system, or UEPS,
as an alternative payment system for the unbanked and under-banked
populations of developing economies. Our market-leading system
enables the estimated four billion people who generally have
limited or no access to a bank account, to enter affordably into
electronic transactions with each other, government agencies,
employers, merchants and other financial service providers. Our
universal electronic payment system, or UEPS, uses smart cards that
operate in real-time but offline, unlike traditional payment
systems offered by major banking institutions that require
immediate access through a communications network to a centralized
computer. This offline capability means that users of the Net1
system can enter into transactions at any time with other card
holders even in the most remote areas so long as a portable offline
smart card reader is available. In addition to payments and
purchases, UEPS can be used for banking, healthcare management,
international money transfers, voting and identification.
Net1 also focuses on the development and provision of secure
transaction technology, solutions and services and offers
transaction processing, financial and clinical risk management
solutions to both funders and providers of healthcare. Its
core competencies around secure online transaction processing,
cryptography and integrated circuit card (chip/smartcard)
technologies are principally applied to electronic commerce
transactions in the telecommunications, banking, retail, petroleum
and utilities market sectors.
Net1 has a primary listing on the Nasdaq and a secondary listing
on the JSE Limited.
Forward-Looking Statements
This press release contains forward-looking statements that
involve substantial risks and uncertainties. All statements, other
than statements of historical fact, included in this press release
regarding strategy, future operations, future financial position,
future revenues, projected costs, prospects, plans and objectives
of management are forward-looking statements. The Company may not
actually achieve the plans, intentions or expectations disclosed in
its forward-looking statements. Actual results or events could
differ materially from the plans, intentions and expectations
disclosed in the forward-looking statements that the Company makes.
Factors that might cause such differences include, but are not
limited to: the risk that the Company's business and the KSNet
business will not be integrated successfully; the possibility that
the expected synergies from the proposed acquisition will not be
realized, or will not be realized within the expected time period;
disruption from the proposed acquisition making it more difficult
to maintain business and operational relationships; the risk that
the proposed acquisition does not close, including, but not limited
to, due to the failure to satisfy the closing conditions; currency
fluctuations between the KRW and the functional or reporting
currency of the Company before the closing date; and other factors,
many of which are beyond the Company's control; and other important
factors included in the Company's reports filed with the Securities
and Exchange Commission, particularly in the "Risk Factors" section
of the Company's Annual Report on Form 10-K for the fiscal year
ended June 30, 2010, as such Risk
Factors may be updated from time to time in subsequent reports. The
Company does not assume any obligation to update any
forward-looking statements, whether as a result of new information,
future events or otherwise.
SOURCE Net 1 UEPS Technologies, Inc.
Copyright . 16 PR Newswire