RE: HOT BUSINESS SPACE
Selectcore to acquire Conquest for $4.76-million
2012-02-10 04:52 MT - News Release
Mr. Keith McKenzie reports
SELECTCORE SIGNS AGREEMENT TO PURCHASE CANADIAN PAYMENT PROCESSOR
Selectcore Ltd., further to the company's press releases dated Oct. 31, 2011, Nov. 21, 2011, and Jan. 23, 2012, has executed the definitive asset purchase agreement to acquire the assets of an arm's-length Canadian payment processor, Conquest Financial Services.
Through this acquisition, Selectcore will add in excess of 2,200 new point-of-sale terminals and merchants to its retail network across Canada. Based on historic performance, the addition of this business is estimated to generate approximately $1.2-million in annual profit for the company not including the incremental revenues and profits anticipated from synergies and the extension of Conquest's services to Selectcore's existing retail partners.
The purchase price of $4.76-million will be satisfied through the issuance of 16,413,793 shares in the capital of the company. An additional 1,034,482 shares will be held in escrow and released quarterly over the next 40 months contingent on the Conquest business meeting certain performance metrics. If these metrics are not fully met, any unreleased shares at the end of the 40-month period will be returned to the company and cancelled. Additional cash consideration can be earned by Conquest over the next 40 months based on 75 per cent of incremental net profit realized from two new customers. An earn-out of up to five million shares in the capital the company or a portion thereof can be earned by Conquest upon finalizing the development of a key product offering within the next five months.
Management is of the view that this acquisition is accretive and will strategically enable Selectcore to launch an industry-first debit/credit payment processing solution for the independent convenience store channel. The company intends to offer this new solution to its existing retail partners where Selectcore-owned VeriFone point-of-sale devices have already been deployed. The transaction also facilitates the company's entrance into the rapidly growing mobile payments and NFC (near-field communication) space.
"This acquisition is a key step in the advancement of the company's business plan to develop new, high-margin payment technologies and financial services while providing a unified solution to our retail partners," commented Keith McKenzie, chief executive officer of Selectcore. "The added mechanism of payment processing gives Selectcore leadership status amongst comparable peers who cannot offer a one-stop point-of-sale solution."
The transaction is subject to approval by the TSX Venture Exchange.
We seek Safe Harbor.