Cardtronics (Nasdaq:CATM) today announced that its wholly-owned subsidiary, Cardtronics USA has entered into a definitive agreement under which it will acquire EDC ATM Subsidiary, LLC and Efmark Deployment I, (collectively "EDC").
Under the terms of the agreement, and upon closing, Cardtronics will pay $145 million, plus or minus an adjustment for working capital as of the closing date. Cardtronics expects this transaction to be accretive to adjusted net income per share in 2011 and increasingly accretive in future years as synergies are fully realized.
Upon closing of the transaction, Cardtronics will acquire all ownership interests in EDC's ATM business, including approximately 3,700 ATMs, as well as numerous ATM placement agreements with high-traffic U.S. retailers and ATM branding contracts with some of America's largest financial institutions. EDC operates nationwide with an ATM placement portfolio focused on multi-state retail operators and high transacting merchant locations, such as convenience stores.
Combination Would Improve Cardtronics' Market Position
In the event of successfully closing this acquisition, Cardtronics would reinforce and enhance its status as creator and caretaker of a value-based community populated by merchants, financial institutions and consumers. Among the expected post-acquisition closing benefits to Cardtronics' network of relationships, EDC's ATM placements would significantly enhance Cardtronics' footprint in the Midwest and Great Lakes regions -- in effect, doubling its owned ATM placements in multiple states. Additionally, upon completion of the acquisition, Cardtronics will have ATM branding relationships with eight of the 15 largest U.S. banks (by assets).
"EDC has built a tremendous network of retail ATM placements and financial institution branding partnerships," said Steve Rathgaber, chief executive officer, Cardtronics. "This acquisition would enhance Cardtronics' reach in more geographic regions across the U.S. and would expand our relationships in the important convenience store market. Cardtronics remains the most proven and trusted ATM provider in both the financial services and retailer worlds."
By The Numbers (upon closing)
ATMs
Cardtronics-owned (U.S.) 23,500
Branded ATMs (U.S.) 14,700
Owned + Managed/Operated
(worldwide) 41,000+
Additional Transaction Details
Cardtronics intends to finance the acquisition primarily through its revolving credit facility, which was recently expanded from $175 million to $220 million. The transaction is expected to be accretive to adjusted net income per share in 2011 and increasingly accretive in future years. EDC generated approximately $56 million of revenue in the 12 months ended March 31, 2011, which does not fully reflect the impact of certain new retail and financial institution relationships initiated during the period. Upon closing, Cardtronics expects to update 2011 earnings guidance.
Approvals and Anticipated Closing
The final completion of the acquisition is subject to various conditions including customary regulatory approvals, including the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, which Cardtronics expects to occur during its third quarter.