Urban FT throws a lifeline to Digiliti Money
16 August 2017 | 4955 views | 0
Urban FT has emerged as a surprise bidder for Digiliti Money, just a day after the beleaguered remote deposit capture company warned that it was contemplating bankruptcy after auditors refused to sign off on its financial accounts for 2016.
The SaaS digital banking provider says it has made an all-cash offer that would enable Digiliti to continue to "serve its customers and stave off potential bankruptcy proceedings". The acquisition, for a sum yet to be disclosed, would be funded through Morgan Stanley on behalf of Urban FT’s principal investor.
The rescue bid comes after a rash of bad news for Digiliti Money, which last week installed a new CEO amid warnings that it expected to post second quarter revenues of between $1.1 million and $1.3 million, compared to $2 million in Q2 2016. The firm has since applied for an extension with the Securities and Exchange Commission to finalise its results statement for Q2 after its accountants said that consolidated financial statements for 2016 could no longer be relied upon.
Urban FT has past experience in closing and integrating bolt-on acquisitions, from its 2015 takeover of Wipit to last month's buy out of mobile banking tech firm iParse. The company has made known its appetite for additional acquisitions of transactional banking operators and providers of mobile, Web or other B2B services that serve community and regional financial institutions.
“Our goal in approaching Digiliti Money with an attractive and timely offer is to keep the business operating and viable as we consolidate the entities to leverage the savings from operational synergies,” says Urban FT COO Glen Fossella. “We believe that our cash offer—with the option for certain shareholders, at their discretion, to convert their Digiliti Money common stock to Urban FT common stock—represents the best benefit to all parties involved, most particularly the consumers who rely on the services of Digiliti Money’s clients."