Its Stock Battered, NCR Is Reportedly Mulling a Leveraged Buyout

NCR Corp., a publicly traded banking and payments equipment manufacturer and software provider, could go private if rumors of a pending leveraged buyout prove true.

The Wall Street Journal reported Tuesday that NCR was in exclusive talks with the private-equity firm Veritas Capital about a possible acquisition. The report noted that a deal could be weeks away, with no guarantees one will be completed. NCR’s stock jumped nearly 13% Tuesday on the buyout rumors, closing at $32.78 per share, up $3.68 from Monday’s $29.10 close.

A spokesperson for Atlanta-based NCR did not respond to a Digital Transactions News inquiry Wednesday morning.

NCR’s stock has trailed major market indexes for years, making the company an acquisition candidate. In February, NCR announced it was conducting a strategic review led by its board of directors “to evaluate a full range of strategic alternatives available to enhance both NCR’s value and shareholder returns.”

NCR made its name first in manufacturing cash registers, and then ATMs and other point-of-sale equipment for grocery stores and retailers. In recent years, however, it has made major pushes into software and services for banks and retailers in an effort to establish a steadier, less cyclical revenue stream with higher growth potential.

NCR’s goal is to get 80% of its revenues by 2026 from recurring services, and it’s nearly three-fourths of the way toward achieving that goal. The company’s 2021 annual report says 72.7% of the year’s $7.16 billion in revenues came from software and services, with 27.3% from hardware. In 2019 those respective percentages were 65.5% and 34.5%.

The company has gone shopping as part of that transition away from manufacturing. Last year NCR bought Cardtronics plc https://www.digitaltransactions.net/in-the-wake-of-the-ncr-cardtronics-deal-experts-point-to-some-intriguing-scenarios/, the leading non-bank ATM network operator, for $2.5 billion, including debt. And in January NCR bought cryptocurrency software provider LibertyX for $69 million.

But there have been bumps in the road. NCR’s stock tumbled after the company reported first-quarter earnings in April.

“NCR had a challenging first quarter due to supply-chain and other cost issues, which dragged their stock down in recent months, but the latest rumors about a possible private-equity buyout have put NCR back in the spotlight again,” Sam Ditzion, chief executive of Boston-based ATM industry consulting firm Tremont Capital Group, tells Digital Transactions News by email.

Ditzion adds that “manufacturing ATM hardware has become an increasingly smaller portion of NCR’s business over the past decade. NCR has successfully diversified into retail, hospitality, service, and software, and seems to be focused on building out its payment-processing and managed-services capabilities following its recent acquisition of Cardtronics.”

NCR hasn’t announced yet when it will report second-quarter earnings.