Global Payments (NYSE: GPN), a leading provider of electronic transaction processing solutions, announced today it has agreed to acquire ZAO United Card Service ("UCS") from ZAO United Investments in a stock purchase transaction.
The transaction is subject to regulatory and noteholders' approval and customary closing conditions as described in more detail in the accompanying Fact Sheet. In particular, noteholders' approval is required as the shares of UCS are pledged as collateral in connection with a structured notes receivable financing transaction in 2004.
UCS is a leading direct merchant acquirer and indirect payment processor in the Russian Federation with almost 40 years of industry experience. In December 2007, UCS entered into a ten-year marketing alliance agreement with Rosbank, which provides UCS with Visa and MasterCard bank sponsorship. Rosbank, along with over 40 other financial institutions in the Russian Federation, also provides agent bank processing referrals to UCS under this agreement. In addition, UCS provides indirect payment processing services to over 70 financial institutions and for over 2,500 ATMs.
Rosbank is one of the top Russian banks with the largest network among privately-owned banks, with total assets of approximately $16.6 billion as of January 1, 2008, and approximately 600 branches with 72 regional subsidiaries throughout Russia. Rosbank's primary activities include retail and corporate banking, investment banking, treasury related operations, trade finance, asset management, private banking, custody and depositary services, international and domestic settlement services, and credit card services. Rosbank is majority-owned by Societe Generale Group (PSE: SOGN).
"We are thrilled to expand our indirect payment processing presence in the Russian payments market and to enter the direct acquiring business with the acquisition of UCS. This transaction demonstrates our continued commitment to our strategic vision of expanding our presence in Eastern and Central Europe, including the Russian Federation. Russia is one of the fastest growing payments markets in the world and will provide strong growth opportunities in both the near- and long-term," said Chairman, President, and Chief Executive Officer of Global Payments, Paul R. Garcia. "In addition to expanding Global's reach in this exciting and fast growing market, we add depth to our existing management team in the region. We will look to UCS and its seasoned management team to accelerate our growth in the Russian Federation and surrounding markets."
"We are excited to be joining a leading provider of electronic payment processing solutions. Being a part of a strong company that understands our business will be welcomed by our current merchant customers, our current bank customers, and our 400 employees," said General Director of UCS, Vladimir Komlev.
Under the terms of the agreement, Global Payments will pay $120 million in cash to acquire UCS. For the calendar year 2007, UCS had $34.2 million in revenue with approximately one half of the revenues from the company's direct acquiring operations. Global Payments expects the transaction to be accretive to earnings per share in the first year. Global Payments' management will discuss this acquisition during its fiscal 2009 first quarter earnings call on October 1. The company has also posted a slide presentation relating to this transaction under the Investor Relations section of its Web site. Management will update the company's financial guidance to reflect this acquisition upon closing of the transaction.