Euronet Expands in U.K. - Analyst Blog

In a bid to consolidate its foothold in U.K., Euronet Worldwide Inc. EEFT has inked a deal to acquire HiFX – an online initiated international payments and foreign exchange services provider. The share price of Euronet gained nearly 4.4% to close at $37.89 on Mar 11, following the news of the purchase deal.

The transaction will cost Euronet nearly $242 million, 25% of which will be paid in shares of Euronet stock while the rest will be paid in cash. The leading global electronic payments provider will be using its existing revolving credit facility to fund a part of the cash transaction. Additionally, Euronet's sturdy financial position including its strong cash balance will help it fund the cash transaction.

HiFX is a leading service provider in the international payments transaction sector. It offers market leading securities, affordable exchange rates and a unique multi-channel platform that allows customers to track payments, make transfers and manage their international payment activity online or through a customer service representative.

During 2013, HiFX transferred more than $15 billion for customers across Australia, New Zealand, U.K. and Europe. Moreover, the company delivered nearly $64 million in revenues and $18 million in adjusted EBITDA during the same year, both of which have been growing significantly over the last three years.

HiFX has affordable rates, a strong online presence, deep knowledge of foreign exchange markets and account based transfers, all of which are expected to complement the operations of Ria – the consumer-to-consumer money transfer brand of Euronet. Following the acquisition, Ria will be able to provide account-to-account international payment service to small-to-medium sized businesses as well as high-income individuals. The combined operation of Euronet and HiFX will give both the companies access to a market that holds potential for 9.9 billion payment transactions. Post the deal, these two companies will together enjoy a wider range of product offerings, extended geographic presence, improved online platforms and enhanced potential to provide more user-friendly customer experiences.

Through the acquisition, Euronet will be able to capture greater market share in the rapidly growing international payments space while simultaneously enhancing its inorganic growth profile.

Among the others in the financial miscellaneous services industry, in Dec 2013, DFC Global Corp. DLLR acquired U.K. based Monte Caja Oro – a chain of 27 stores that are located primarily in the Catalonian and Andalusian regions of Spain.

Zacks Rank

Euronet presently carries a Zacks Rank #2 (Buy). Some other top-ranked stocks in the same space are Apollo Residential Mortgage, Inc. AMTG and Portfolio Recovery Associates Inc. PRAA. While Apollo Residential sports a Zacks Rank #1 (Strong Buy), Portfolio Recovery carries a Zacks Rank #2.