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Alphyra merges with Cardpoint

Payzone is born

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Irish payment services firm Alphyra has merged with UK firm Cardpoint in a deal reportedly worth €800m.

The merger is a reverse takeover of Cardpoint by Alphyra under the rules of London's Alternative Investment Market (AIM). The two firms will combine to form a new company called Payzone.

Under AIM rules an extraordinary general meeting of Cardpoint shareholders must be held to approve the deal. The merger is expected to be approved and completed by December with the new business to have its headquarters in Ireland and be listed on the AIM. Under the terms of the deal Alphyra will own 59 per cent of Payzone while Cardpoint will hold the remaining 41 per cent.

"This transformational deal creates a leading consumer payments acceptance and cash distribution network with operations throughout Europe and strong potential for growth. With a highly experienced management team in place and a clear strategy for growth, we are confident that this merger will create significant value for shareholders," said Bob Thian, chairman of Cardpoint.

Alphyra provides payment systems such as electronic top-ups and credit card processing to retailers. Cardpoint operates around 6,000 cash machines throughout the UK and Germany. The firms said the merger offered the new entity growth opportunities in Cardpoint's existing markets as well as in Romania, Poland and Greece where Alphyra has made developments in recent times.

ENN reported earlier this month that the two firms were in discussions over a possible merger when Cardpoint responded to media speculation by confirming that they were in talks with the Irish business.

Alphyra's chief executive John Nagle will head up Payzone, and the new company will have operations in 21 countries in total.

"This is an exciting merger combining cost savings and enhanced economies of scale, with a management team well positioned to participate in sector consolidation. Alphyra has emerged from a successful period as a private business in excellent health and focused on leveraging the significant international and domestic growth opportunities for the benefit of all shareholders," said Nagle.

Sixty-seven per cent of Aplyra has been owned by private equity firm Balderton since 2002, when it backed a €88m management buyout that saw John Nagle and the management team retain the remaining 33 per cent.

Balderton had been looking to dispose of its stake since May 2007 following disagreements with management over the performance and strategy of the company. Both the management shareholders and Balderton have stated that prior to the admission of Payzone shares to the AIM they intend to sell up to 50 per cent of their Payzone shares at or around the date the merger is completed.

A relationship agreement between Payzone, Balderton Capital and the Alphyra management contains "lock-up arrangements" to restrict the sale of the remaining Payzone shares held by these shareholders.

© 2007 ENN

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