FreeStar rejects $45m bid from Planet Payment for Rahaxi, other assets
FreeStar Technology Corp. (OTC BB:FSRT.OB) an international card payments processor and technology company, today announced that it had rejected a proposed offer to acquire all of the assets of Rahaxi, Inc., the Company's wholly-owned subsidiary, as well as certain other Company assets.
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Planet Payment, Inc (LSE:PPTR.L) (LSE:PPT.L) submitted the preliminary offer letter through its representative, Canaccord Adams Limited. The proposal, which was non-binding and subject to various due diligence and other contingencies, including negotiation of a definitive agreement, offered a maximum of US$45 million for the assets, with all funds payable in restricted stock of Planet Payment. The proposal was structured with an initial restricted stock payment of $12.5 million and up to an additional $32.5 million in potential aggregate earn-out payments, which were contingent upon substantial future revenue growth by the Rahaxi business and other assets.
The Company rejected the proposal for a number of reasons, including the overall consideration and proposed structure of the transaction. The Company may instead focus on pursuing a strategic business relationship or contract with Planet Payment not involving any sale of Company assets or stock. Certain other parties have expressed preliminary interest in a potential Partial acquisition or investment in Rahaxi; however, no formal proposals are pending and the Company may elect to terminate all such discussions at the discretion of the Company.
Paul Egan CEO stated: "We are seeing the interest in Rahaxi's Robust platform stemming from the current industry consolidation and regulatory guide lines that have come into effect including EMV and PCI compliance. Rahaxi Processing Oy will leverage its processing capacity to align itself with partners wishing to comply with the new guide lines of Visa and MasterCard and other Card issuers. We are seeing a growing interest in both international and Finnish domestic card processing business and are encouraged by discussions currently taking place with interested parties on the possible investment and strategic business relationships."