PayPoint has entered into agreements to acquire the entire share capital of Verrus Mobile Technologies Inc and of Verrus UK Limited (together Verrus) for an initial consideration of £25 million plus £4 million deferred consideration and £4 million consideration contingent on the cumulative results of Verrus until 31 March 2013.
The consideration is payable in cash and will be settled out of existing resources.
Verrus is a leading international provider of services to parking authorities allowing consumers to use their mobile phones to pay for their parking by credit or debit card. It operates under the Verrus and PayByPhone brands and has contracts in the UK, France, Canada and the USA. Existing management will continue to run the business.
David Newlands, Chairman of PayPoint plc, said: "Verrus is an important acquisition for PayPoint and a key development in our strategy of broadening our payment services capability. Strong demand for PayByPhone, interesting cross-over opportunities with our existing client base for a new payment channel and opportunities to extend the Verrus application to other services make Verrus a powerful addition to PayPoint's payment service offering. We are delighted to welcome Verrus' employees to PayPoint."
PayPoint will benefit from:
• Substantial growth in the market for PayByPhone parking;
• Extension of PayByPhone into other applications; and
• Synergies from broadening PayPoint's service offering:
o Potential for international expansion in multi-channel payment services off the back of Verrus presence;
o Internet business offering to parking authorities for the credit/debit settlement from consumers; and
o Enhanced PayByPhone service by offering cash loading of prepaid cards as additional payment channel.
The aggregated loss of Verrus for the year ended 31 December 2009 was £0.5 million, and its gross assets on that date were £1.9 million, based on un-audited accounts. PayPoint's directors expect the transaction to have a positive impact on the earnings of the group in the second year after acquisition at current rates of interest.
Verrus will continue to be managed by Desmond Griffin (in Canada) and Robin Bevan (in the UK). Desmond GriUK). Desmond Griffin was a co-co-founder of Verrus in 2000 and has been CEO since then. Robin Bevan founded Verrus UK in 2004 and has been CEO since then. Both have new service contracts on substantially the same terms as existing and both are participants in the arrangements for deferred and contingent consideration, payable after 31 March, 2013.
Verrus is active, in contract or in trial, in over 100 towns and cities including five London boroughs, Vancouver, Miami, Washington D.C., Boston, San Francisco Bay Area and Paris. In addition to dealing with public authorities, it also has contracts or trials with a number of private parking operators in Europe and North America, such as Vinci, Standard, Impark and NCP. The largest contract is with the City of Westminster, where Verrus is the main provider for on-street parking payment. Since its introduction in Westminster, parking revenues have increased by 45% and costs have reduced by over 20% driven by significant reductions in theft, elimination of lost revenue from out of order meters, the ability to introduce more flexible charging and increased yields per space.
Commenting on this deal, Alastair Gilchrist, Strategic Director for Resources, City of Westminster, said: "We have worked with Verrus to bring the very substantial benefits of PayByPhone to Westminster, to provide consumers with a convenient service, with improvements to the local environment through the removal of meters and improvements in parking enforcement. Verrus has been responsive to requests for changes to make the service more user-friendly and more efficient. We believe the acquisition by PayPoint, with its financial strength, reputation for technology development and service propositions, will quickly lead to further benefits for the users of our service."