Universal Business Payment Solutions Acquisition Corporation (UBPS) NASDAQ: Common Stock: UBPS, a special purpose acquisition company, today announced that it has entered into definitive agreements to acquire three profitable and growing companies to facilitate its strategy of providing end-to-end transaction processing services to small businesses:
- Electronic Merchant Systems (“EMS”), Cleveland, OH a major credit and debit card sales organization;
- Jet Pay LLC (“JetPay”), Carrollton, TX a top-15 U. S. credit and debit card processor according to Nilson; and
- A D Computer Corporation (“AD Computer”), Center Valley, PA and Payroll Tax Filing Services, Inc. (“Payroll Tax Filing”), related payroll processing and tax filing companies.
Details of Transaction
UBPS will acquire the three companies in a transaction valued at approximately $179 million, of which $104 million will be paid in cash, $38 million in newly issued UBPS common stock, and the balance as future payments in cash and UBPS stock (with $25 million of such future payments contingent on the achievement of certain targets). The cash portion of the consideration will be funded by a combination of a $60 million credit facility and UBPS cash held in trust.
The business combination is subject to approval by the Company’s stockholders, as well as regulatory approval and other customary closing conditions. Assuming these conditions are met, the business combination is expected to close early in the fourth quarter of this year.
Background on Acquisition Businesses
- EMS - Since 1987, EMS has grown to become a leading provider of merchant processing services and electronic transactions. Based in Cleveland, Ohio, the company operates in over 100 U.S. cities serving over 16,000 customers across the country. EMS provides high-quality payment processing services and support to traditional retail merchants. EMS processes and safeguards many types of electronic payment transactions including all major credit cards, debit cards, EBT, stored-value, and electronic check services.
- JetPay is a front and back-end credit and debit card and check processor located in Carrollton, TX, offering a wide array of business processing services and features, combining real-time credit and debit card processing, online payment capabilities, and merchant account services into one solution. With more than two decades of experience, JetPay is a Top 15 payment processing company in volume in the U.S. according to Nilson. The company offers processing services to banks, sales organizations, merchants, and for a number of large e-commerce sites on the web today.
- Since 1971, AD Computer and its related company, Payroll Tax Filing are headquartered near Allentown, PA and have provided comprehensive payroll and payroll tax filing services to businesses of all types and sizes throughout the United States. AD Computer’s payroll system is designed with optimum flexibility to accommodate payrolls of all sizes – from small family businesses to large corporations with up to 10,000 employees. The company has historically focused on local markets in the Lehigh Valley, Pennsylvania region, but has created an adaptable payroll processing infrastructure with capacity to expand into other markets under UBPS.
Innovative Combination to Fill Growing Industry Need
The Company feels that its addressable market is primarily U.S. small business, which according to the US Economic Census currently comprises approximately 30% of the Country’s GDP ($4 trillion) and almost half of the national workforce. Currently, the small business owner primarily requires five distinct payment transaction services: payroll processing and related employee services; debit and credit card processing / accounts receivable processing and billing; accounts payable and procurement; funding related to debit and credit card processing receipts; and stored value card products (PayCards, gift cards, others) for employees. The industry has undergone a period of consolidation, with several companies seeking the necessary scale to compete.
Upon closing, UBPS expects to serve more than 23,000 small business customers through approximately 400 employees, with significant capacity for expansion. In addition to a strong recurring revenue stream, the combination creates a platform company with the scale to support considerably more small business customers. UBPS believes that while it will be cautious to ensure that the three companies are merged with the least disruption to its customers and employees, management expects that the integration should be completed within 12 months. The Company’s corporate headquarters will continue to be based in Chester County, Pennsylvania.
Click here to view the entire UBPS press release.
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