A Deal for Vend Helps an Acquisitive Lightspeed Bulk up As Covid Restrictions Ease

Canadian processor Lightspeed POS Inc. announced Friday it has entered into an agreement to acquire Vend Ltd., a New Zealand-based provider of cloud-based retail management software. The cash and stock deal is valued at $350 million. Lightspeed will pay $192.5 million in cash and issue subordinate voting shares in the capital of Lightspeed valued at $157.5 million. The deal is expected to close in late April.

The acquisition of Vend increases Montreal-based Lightspeed’s customer locations by 20,000 worldwide to 135,000, a 17% increase. Vend processed $7 billion in volume in 2020.

By adding market share in the retail sector, Lightspeed argues it is well-positioned to undergo accelerated organic growth later this year as the as retail and hospitality markets start to re-open following the easing of Covid-19 restrictions on crowd sizes in public places.

The deal for Vend follows by four months Lightspeed’s acquisition of ShopKeep POS, a New York City-based rival, for consideration that included $145.2 million in cash.

“With the elimination of another competitor, Lightspeed is becoming the global leader in cloud-based POS for retail and hospitality in our view,” RBC analyst Dan Perlin says in a research note. “This better positions Lightspeed to gain new customers and benefit from the rebound in gross transaction value with re-opening later in 2021.”

At the same time, some observers argue the deal is likely to deliver a blow to competitors that partnered with Vend. “This acquisition is a huge hit to many of Lightspeed’s competitors, as other payment companies like Chase, First Data (Fiserv), and others, all utilized Vend as an integrated partner,” John Jakobe, market intelligence manager for The Strawhecker Group says by email. “Vend has historically offered a very competitive e-commerce offering which may augment Lightspeed’s current offering, but this acquisition is likely more about market share/competition than anything.”  The Strawhecker Group is an Omaha, Neb.-based payments and acquiring consultancy.

Vend has a sizable presence in Australia, New Zealand, and the United Kingdom. “This is likely not an acquisition meant to improve product, but rather one to improve market share and expand into new geographies,” adds Jakobe. “Lightspeed is a Canadian company whose market share is really only sizable in North America and the United Kingdom.”

While Lightspeed has been on an acquisition spree the past year, purchasing Upserve Inc., a Providence, R.I.-based provider of cloud-based restaurant-management software as well as payments and commerce provider ShopKeep, it’s likely that the company’s run of major acquisitions is coming to an end, according to Jakobe.

“This may mark the end of the acquisition spree, but I could definitely see them making a couple smaller moves in the e-commerce/payments space to augment these POS centric acquisitions,” Jakobe says.