Online payments outfit Neovia Financial (formerly Neteller) has agreed to buy the European pre-paid payment services division of IDT Corporation in a cash deal worth £10 million.
The deal is for the entire issued share capital of IDT Financial Services Holdings Limited and certain other assets. Neovia will pay a total cash consideration of $15.05 million, including $10 million of banking regulatory capital.
Founded in 2006, the unit provides pre-paid MasterCard products across Europe - in the UK market under the IDT "Prime Card" brand. By combining it with the Neovia Net+ card services, the deal will create one of Europe's largest independent pre-paid debit card businesses, says the vendor.
Neovia says the deal will also add new product lines and distribution based on the IDT Prime Card, accelerating the development of the Net+ card business and increasing the Neteller e-wallet customer base.
Ron Martin, president and CEO, Neovia, says: "The integration of IDT Finance's well-regarded prepaid debit card operation and banking licence will enable us to leverage our existing capabilities to offer additional products and services."
IDTFS, the principal operating subsidiary, reported revenues for the year ended 31 July 2008 of £1.4 million and a loss before tax of £1.85 million. At 31 July 2008 it had net assets of £7.66 million, excluding £4.03 million of intercompany liabilities which will be written off prior to completion.
Neovia expects the acquisition - which is subject to approval from the Gibraltar FSC and MasterCard consent - to be accretive to earnings before one-off costs in the first full year after completion, assuming that the deal is consummated early in 2009.