Rescue Bid From Digital-Payments Tech Firm Gives a Big Lift to Digiliti’s Stock

Digital-banking platform developer Urban FT Inc. disclosed early Wednesday that it has made a “compelling offer” for financially troubled Digiliti Money Group Inc., a provider of mobile remote deposit capture services for banks.

News of the all-cash offer, whose size wasn’t disclosed, sent Digiliti’s beaten-down stock soaring on the Nasdaq Capital Market Wednesday morning, at times doubling from its Tuesday close of 20 cents per share. Shares of Chanhassen, Minn.-based Digiliti—which traded in the $4 range as recently as April—have plunged in the wake of announcements about its chief executive resigning, a big drop in revenues, the need to restate its 2016 financials, and a possible sale of the company or bankruptcy filing.

Spokespersons for Digiliti, formerly known as Cachet Financial Solutions, did not respond to a Digital Transactions News’ request for comment about the buyout offer.

New York City-based Urban FT has 40 employees and describes itself as a provider of a white-label software-as-a-service platform for digital banking. The company claims 75 regional and community banks and credit unions as customers, according to a profile of its co-founder and chief executive, Richard Steggall, in a Mercator Advisory Group blog post.

In a press release, privately held Urban FT said it made a “compelling bid to rescue troubled Digiliti Money” on Tuesday to Digiliti’s board chairman, James L. Davis. If accepted, the offer would be funded by investment bank Morgan Stanley on behalf of Urban FT’s principal investor, Urban FT said.

Urban FT has acquired financial technology companies before. Last month, it bought iParse LLC, an Oregon-based mobile-banking tech firm with a number of patents. In 2015, Urban FT bought Wipit Inc., a digital-wallet tech provider that focused on mobile virtual network operators.

“We’re able to move quickly to rescue Digiliti because of the support of the Urban FT board of directors and investors, and because we have a clearly defined acquisition strategy that focuses on businesses with strong client relationships, recurring revenues, and technologies that deliver an additional competitive advantage to our core products and services,” Urban FT chief operating officer Glen Fossella said in a statement. “Digiliti Money is within our acquisition parameters, and, ultimately, we believe will deliver an earnings-accretive outcome to all relevant stakeholders.”