Monitise, a UK-based mobile money network, has acquired US-based Clairmail, a provider of mobile banking and payments solutions in a share-only transaction. Investor Growth Capital, JAFCO Ventures, Norwest
Northwest Venture Partners and Outlook Ventures are all backers of Clairmail.
(CORRECTION: Clairmail backer Norwest Venture Partners was incorrectly spelled in an earlier version of this story).
Monitise plc, (LSE: MONI.L), the technology and services company delivering mobile banking, payments and commerce networks worldwide, announces that it has entered into an agreement to acquire Clairmail Inc., a leading US provider of mobile banking and payments solutions (the “Acquisition”), further enhancing Monitise’s position as the global leader in the fast expanding mobile money market. Clairmail is growing rapidly with revenues in 2011 up by 90% year on year.
The Acquisition consideration will be satisfied entirely by the issue of up to 312,787,144 new Ordinary Shares representing approximately 26.5% of the fully diluted share capital of the enlarged Company1, post completion, and values Clairmail at approximately US$1732m (£109m), based on Monitise’s share price of 35.0 p as of the close of trading on March 23, 2012. The deal is conditional upon US regulatory and shareholder approvals. It is expected that the Acquisition will be completed before the end of the financial year 2012.
Acquisition highlights and benefits:
Further enhances Monitise’s position as the leader in mobile money globally.
Creates a pure-play mobile money company of unprecedented scale, in the US, which is expected to be the world’s largest mobile banking and payments market.
Unique bank-grade technology capabilities, network partnerships and R&D expertise.
Currently, the combined businesses provide world-leading mobile money services to 13m registered end consumers via some of the world’s leading financial institutions such as the Royal Bank of Scotland Group, two of the largest card issuers in the US, Lloyds TSB, PNC Bank, U.S. Bank and Fifth Third Bank among others.
Together the combined technology platforms process billions of transactions a year and over US$10bn of payments and transfers on a current weekly annualised basis.
In North America, the combined businesses following the completion of the Acquisition (the “Enlarged Group”), will provide mobile money services to the widest possible range of financial institutions. A third of the top 50 North American financial institutions (including 8 of the top 13) have chosen our services as well as 100s of smaller and medium sized financial institutions. The Acquisition provides a step change in growth potential for the Company through direct sales in North America. This, combined with Monitise’s existing and unmatched Visa Inc. and FIS strategic partnerships, provides the Enlarged Group with a leading position in the US and three commanding routes to market.
Presents significant revenue synergies through leveraging the Enlarged Group’s technology capabilities across the combined customer base and providing access to Monitise’s partnership network:
Provides proven model for delivering services on both an on-premise and a Software as a Service (SaaS) basis to financial institutions in the US, maximising the potential pool of customers to which the Enlarged Group would be the supplier of choice.
Provides the ability to offer enhanced product functionality to US financial institutions and a far broader product roadmap.
Delivers the benefits of Monitise’s network approach to US customers by enabling customers to connect to a wide variety of service providers spanning finance, merchants, loyalty programmes and ticketing.
The Acquisition creates a world class team with an in-depth knowledge of the US and global markets. The Clairmail management team and employees are expected to remain with the Enlarged Group with Pete Daffern CEO, of Clairmail, working closely with Frank D’Angelo, Executive Chairman Monitise Inc. and former Executive Vice President of Payment Solutions at FIS, as Monitise focuses on accelerating its significant growth opportunity in the US.
The Enlarged Group has 600 staff across North America, Europe, the UK, Asia-Pacific, Africa and India, providing an unprecedented level of expertise in this high growth space.
A detailed integration plan is in place and integration will begin immediately following closing.
Financial summary and outlook:
Like Monitise, Clairmail is in the high growth stage in addressing the substantial global mobile money opportunity.
Clairmail’s revenues grew by 90% in calendar 2011 to US$18m3 (£11m), with a minimum contracted order book at year end of US$47m (£30m), plus an additional US$36m (£23m) of expected user generated revenues from existing contracts.
On a pro forma basis, the Enlarged Group’s revenues for calendar 2011 would have been US$56m4 (£35m), with a minimum combined order book at year end of US$178m (£113m), plus a further US$226m (£143m) of expected revenues from existing contracts.
Combined pro forma revenues for calendar 2012 are expected to be close to US$100m.
The EBITDA5 loss for Clairmail in calendar 2011 was US$21m6 (£13m), giving a pro forma EBITDA loss for the Enlarged Group of US$43m (£28m).
Before the end of calendar 2013, Monitise expects the Acquisition to be earnings accretive and the Enlarged Group to achieve EBITDA breakeven, with gross margins in excess of 70% by June 2013.
The Enlarged Group’s net cash balance on a pro forma basis at the end of calendar 2011 was US$73m (£46m).
Alastair Lukies, Monitise Group Chief Executive, commented:
“Monitise has established itself as the world’s number one platform and ecosystem of choice in the hugely exciting mobile money industry. This transaction further enhances this leadership position and is great news for all those wanting to offer bank-grade mobile money services to billions of consumers worldwide.
Combining Monitise and Clairmail substantially accelerates our already strong position in one of the world’s leading banking and payments market, namely the US. With a population of 314 million and over a 100% mobile phone penetration, it is anticipated that 111 million US consumers will be using mobile banking by 20167 while mobile commerce revenues are forecast to hit $31 billion in 20168. The future of payments, the internet, retail and social networking is all mobile.
This deal is transformational for our customers, our team, our shareholders and our company. With the ongoing support of our strategic partners such as Visa and FIS we are perfectly placed to help our clients in the financial services industry defend and extend their position amid the seismic changes being unleashed by mobile.
Pete and his team have done an impressive job in building relationships, products and the overall Clairmail business which is very well respected in the US market. We look forward to welcoming them to the Monitise journey.”
Pete Daffern, Clairmail Chief Executive Officer, commented:
“Since 2004, we have been dedicated to helping our financial institution clients interact with their customers and drive new sources of revenue via mobile, the strategic channel of the future.
Consumers in the US are benefiting from increasingly innovative and integrated mobile banking, payments and commerce services on their handsets so they can manage their money on the move. Clairmail has established itself as a market leader as the appetite for mobile banking and payments has grown exponentially.
We are excited to be joining the Monitise family at a key point in the mobile money revolution. This combination presents a significant opportunity to jointly propel our innovative and market-leading products and services to the next level. Together, we are a more attractive partner for our customers and a more exciting company for our employees.”
Goldman Sachs International acted as financial adviser and Canaccord Genuity Limited as Nominated Adviser and Broker to Monitise in connection with the Acquisition.
An analyst and investor call and presentation will be held on Monday March 26 at 3.00pm BST/ 10.00 am EST/ 7.00 am PST.
Dial-in details are as follows:
Conference ID and name: 65441607, ‘Monitise call’
UK: Free call at 0800 694 1610
UK Standard International: +44 (0) 1452 587 434
US: Free call at 1866 597 3800
Slides will be made available at https://webconnect.webex.com/webconnect/onstage/g.php?t=a&d=660179638
Please ensure that you register at least 10-15 minutes before the conference start time.
A replay facility will also be available at http://www.monitisegroup.com/investor_relationsfrom Tuesday, March 27 until Tuesday, April 3.
1. Taking account of assumed issue of warrants and shares under option scheme
2. Foreign exchange rate for Sterling/US Dollar used is $1.58, being the rate as at 23 March 2012
3. Management estimates of rebased IFRS numbers and accounting policies, equivalent revenues of $13m under US GAAP
4. Includes management estimates of rebased IFRS numbers and accounting policies
5. Defined as Earnings Before Interest Tax Depreciation and Amortisation, share based payments and exceptionals
6. Management estimates of rebased IFRS numbers and accounting policies, equivalent EBITDA loss of US$18m under US GAAP
7. Javelin Research, 2012
8. Forrester Research, 2011
Gavin Haycock, Media Relations
Tel: +44 (0) 20 7947 4156
Haya Herbert-Burns, Investor Relations
Tel: +44 (0) 20 7947 4928
Monitise Executive Team
Alastair Lukies, CEO
John Brougham, CFO
Lee Cameron, CCO
Mike Keyworth, COO
Frank D’Angelo, Executive Chairman, Monitise Inc.
Canaccord Genuity Limited (NOMAD)
Tel: +44 (0) 20 7050 6500
Goldman Sachs International
Tel: +44 (0) 20 7774 1000
Tel: +44 (0) 20 7831 3113