UK smart cards systems vendor ID Data has signed an agreement to acquire the business and assets of CredEcard, a loss-making provider of pre-paid card services, for a total consideration of up to £725,000 in cash and shares.
Under the agreed terms of the acquisition,, ID Data will issue 25 million new ordinary shares to CredEcard at one pence per share as an initial payment, with further contingent payments of up to £400,000 in new ordinary shares and £75,000 in cash subject to the unit achieving specified performance objectives over the next two years.
In the year ended 30 April 2006 CredEcard made an operating loss of £351,167 on turnover of £567,347 and an operating loss of £571,170 on turnover of £173,335 in the six months ended 31 October 2006.
Commenting on the acquisition, Peter Cox, CEO of ID Data, says the takeover "moves ID Data up the 'value chain' from being a plastic card and solutions provider into a broader financial services company".
"As a card solutions company, we understand the pre paid market and its participants to whom we have provided products and consultancy services," says Cox. "Through this acquisition we will now be able to service many clients who seek an end-to-end pre paid solution, not just with product, but with a fully integrated financial, transaction and money transfer service."
ID Data says its combined pre-paid business will use the CredEcard brand and will be run as an independent unit within the group.
The vendor says it will also raise additional funds to allow earlier and more rapid development of its pre-paid business.