Eye on Acquisitions: Cardtronics Buying DCPayments; MetaBank Acquires EPS Financial

By Jim Daly
@DTPaymentNews

The first business day of 2016’s fourth quarter produced several announcements about payments-industry acquisitions. In the biggest, globe-trotting ATM network operator Cardtronics plc will gain a toehold in the Asia-Pacific region by acquiring Canadian ATM firm DirectCash Payments Inc. (DCPayments) for $460 million.

Meanwhile, Meta Financial Group Inc. said its MetaBank subsidiary, a major prepaid card issuer, has an agreement to acquire the assets of EPS Financial LLC, a payment processor and payroll card provider owned by a tax-return software firm, for $42.5 million. And e-commerce platform provider Shopify Inc. announced that it bought Boltmade Inc., a privately held software-development consultancy.

• Cardtronics. The Houston-based owner or operator of approximately 200,000 ATMs announced on Monday its pending acquisition of Calgary, Alberta-based DCPayments, just three days after DCPayments itself closed on a deal to buy First Data Corp.’s portfolio of 3,500-plus ATMs in Australia for A$55 million ($42.2 million). Some 2,600 of the First Data machines are retail ATMs and 930 serve financial institutions. The ATMs, which now will come under Cardtronics’ wing, generate approximately 56 million transactions annually. Cardtronics in August reincoporated as a United Kingdom-based company, but retained its Houston operations.

In all, DCPayments operates more than 25,000 ATMs—7,786 in Canada, 371 in Mexico, 5,714 in the United Kingdom, and 11,265 in Australia and New Zealand. Cardtronics already operated 16,203 ATMs in the U.K., where it is now legally domiciled, and 3,557 in Canada and 371 in Mexico, as well as in the U.S. and some European countries.

“DCPayments’ presence in Australia and New Zealand facilitates our entry into Asia-Pacific, which is a new frontier that we are excited about,” Cardtronics chief executive Steve Rathgaber said in an early Monday conference call with analysts.

Rathgaber said further acquisitions in the APAC region are possible, but they will be made “opportunistically.”

“I don’t expect it to be an avalanche or a rush,” he said.

Cardtronics will fund the acquisition with cash on hand and debt. The deal is expected to close in 2017’s first quarter.

• MetaBank. The acquisition of EPS Financial, a subsidiary of Franklin, N.C.-based Drake Enterprises Ltd., a developer of software used by 50,000 tax-return preparers, strengthens the ties between the Sioux Falls, S.D.-based banking firm and payment processor and the electronic tax-refund industry. Easton, Pa.-based EPS is an independent sales organization that in addition to payment card acceptance for merchants offers tax-refund settlement services and automated clearing house network processing, as well as payroll cards to employers.

“This acquisition will further Meta’s competitive positioning in the tax-payments industry,” J. Tyler Haahr, chairman and CEO of MetaBank, said in a statement.

MetaBank bought the assets of another tax-refund specialist, Fort Knox Financial Services Corp., in September 2015 for $50 million. Fort Knox, owner of the Refund Advantage brand, at the time provided tax-refund transfer software used in 10,000 locations and processed 1 million transactions a year.

The EPS deal enhances Meta’s services as it competes with prepaid card rival Green Dot Corp., which bought a tax-refund services provider, Santa Barbara Tax Products Group, for $320 million in October 2014.

EPS currently uses two MetaBank rivals to issue its prepaid cards—The Bancorp Bank and First Century Bank, according to its Web site.

“As with the Refund Advantage acquisition, over time Meta will assume certain services provided by others to EPS and make available other Meta products and services to tax preparers and their customers, which should further enhance the economic benefits from this transaction,” Haahr said.

The EPS acquisition will be funded half in cash and half in Meta Financial stock, and is expected to close this quarter.

• Shopify. The Ottawa, Ontario-based e-commerce services firm said Boltmade, which has a staff of 21 in its Waterloo, Ontario, offices, will help it accelerate development of its cloud-based Shopify Plus product for fast-growing, high-volume merchants. Terms of the deal were not disclosed.