US payments processor eFunds Corporation has signed a definitive agreement to acquire Florida-based WildCard Systems, a privately-held provider of pre-paid and stored value card services, for $228.8m plus an earn-out of up to $58.8m.
The purchase price is less a $22.8m holdback. Payment of the earn-out is dependent upon the 2006 revenues of the acquired business.
Commenting on the acquisition, Paul Walsh, chairman and CEO of eFunds, says: "The complementary nature of debit and prepaid brings a powerful value proposition to the financial institution, retail and other issuer markets served by both companies. This acquisition is an important step in the execution of eFunds' strategic plan to build breadth into our electronic payments offering."
EFunds says research by the Mercator Advisory Group shows that the pre-paid market is estimated to grow by more than 20% over the next five years, making it one of the fastest growing payment segments.
The acquisition comes after the two companies signed a distribution agreement in November 2004, which resulted in two tier one financial institution deals under eFunds' existing alliance with MasterCard International.
Larence Park, CEO and co-founder of WildCard Systems, says: "Our integrated debit and prepaid offering moves customers closer to a single 'payment hub', streamlining the management of their consumer accounts."
The transaction is expected to close in early July 2005.
As a result of the deal, eFunds has raised its growth forecast for 2005 and now expects a gain of 15-19% over last year's net income of $40.8m, and an increase in revenue of 18-22%, up from its previously expected growth of 8-12%.