EML renegotiates PFS deal

EML Payments has renegotiated the terms of its acquisition of European payments company Prepaid Financial Services, significantly reducing the upfront consideration and revising the targets for the earn-out component.

The market reacted well to the news and EML's share price was up by more than 30 per cent at one stage yesterday.

Last November, EML announced that it would pay £226 million upfront and a £55 million earn-out for PFS, a provider of white label payments and banking-as-a-service technology.

Its customers include financial institutions, non-financial corporates, fintechs and public sector organisations in 24 countries.

EML claimed that the acquisition would make it one of the world's leading prepaid payments providers and a leading fintech enabler in open banking.

It said the acquisition would add digital banking and multi-currency offerings to its product suite.

It was EML's third European acquisition for the year. Last July it acquired 25.1 per cent of Irish payment card company PerfectCard DAC it did not already own, and in May, it acquired Flex-e-Card Ltd - a gift cards business that trades as flex-e-card and flex-e-vouchers.

Under the terms of the revised deal EML's upfront cash payment drops from £185.2 million to £85 million. The value of the upfront equity consideration drops from £41 million to £26.5 million.

Part of the upfront consideration has been deferred, with £10 million payable in 2024 and £10 million in 2025.

In total, the upfront consideration has come down from £226.2 million to $131.5 million. The company said cash payments would be funded entirely from its reserves, leaving it with more than A$100 million in cash.

The £55 million earn-out stands but is contingent on re-based annual EBITDA targets in excess of 33 per cent compound annual growth over three years.

EML has received approvals from the UK Financial Conduct Authority and the Central Bank of Ireland for the changes to the deal.

It said in a statement: "It is the view of the board that the PFS business remains a high quality business and a complementary fit with our existing operations. This acquisition fast tracks the transition of EML to a general purpose reloadable business, which has been a multi-year strategy."