TIO Networks, a bill payment service provider, has announced an agreement to acquire Globex Financial Services, which provides bill payment services to a number of U.S. utility companies. Under terms of the agreement, Globex shareholders will receive a one-time pre-closing dividend, of unspecified size, in addition to $8 million from TIO Networks.
The full announcement is below:
TIO Networks to Acquire Globex Financial Services
– Transformative acquisition to create industry leader in US bill payment and underbanked financial services market
– Combined companies processed more than 35M transactions worth more than $3BN in payments last year
– Transaction anticipated to be accretive after one-time costs
– Core Innovation Capital to make investment and join board of directors upon closing
Vancouver, BC and Silver Spring, MD, July 12, 2013 – TIO Networks Corp. (TSX-V: TNC) (“TIO”), North America’s leading expedited bill payment company, has entered into an agreement to acquire Globex Financial Services, Inc., and its operating business Global Express Money Orders, Inc. (“Global Express”). Globex is a leading bill payment services provider to some of the largest utilities in the United States.
The acquisition of Globex Financial Services, Inc. will strengthen TIO’s position in the bill payment industry and provide TIO with a national footprint. It is anticipated that revenue synergies will include the cross selling of TIO’s innovative mobile payment, self-service kiosk and financial wallet technologies to an expanded customer base. The combined companies will offer bill payment services to millions of consumers across the US and Canada.
In 2012, Globex generated over US$10M in revenues at gross margins that are significantly higher than TIO’s historical gross margins. With this acquisition, TIO will enjoy significantly higher consolidated revenues and gross margins as well as a more diversified revenue base across customers, geographies and industries. Upon closing, the percentage of TIO’s revenue and margins attributable to the utility industry will increase. The transaction is anticipated to be accretive after one-time deal and integration expenses.
“We are very pleased to welcome Global Express and its valued employees and partners to the TIO Family,” said Hamed Shahbazi, Chairman and CEO of TIO Networks. “The combination of TIO and Global Express will create a formidable market leader in key segments of the underbanked financial services marketplace.”
“Over the past couple of decades, Globex has built a strong and stable bill payment business as well as a comprehensive retail footprint in the eastern USA which complements TIO’s existing retail network,” said Randy Mersky, CEO of Globex, “We look forward to opportunities to expand our business in combination with TIO’s industry-leading offerings.”
The transaction is expected to close later this year after regulatory approvals and requirements have been satisfied pursuant to the jurisdictions both companies operate in. Globex Shareholders shall be compensated by a one-time pre-closing dividend by Globex in addition to US $8 million from TIO Networks.
Randy Mersky, President of Globex and Global Express and the largest shareholder of Global, will remain as president of Globex after closing. TIO will be funding the transaction with a combination of cash on hand, debt and $3 million in equity issued to Core Innovation Capital at a price of $0.35/share upon closing of the transaction.
“Underbanked consumers represent the next great market opportunity in the United States, and TIO has provided visionary and meaningful services to this Emerging Middle Class for many years,” said Arjan Schütte, founder and managing partner of Core Innovation Capital. “TIO’s network of self-service kiosks and powerful web and mobile payment tools are a perfect fit for Globex and their deep penetration in the utility bill payment industry. We are excited to partner with both TIO and Globex, and look forward to helping them expand their business.”
The acquisition and related financing remain subject to approval of the TSX-V.
A conference call to discuss the transaction noted above will be held later today at 9 a.m.PST/12p.m. EST. To participate in the call please dial 416-644-3426 in Toronto or Toll free, 1-800-731-5319 and request the TIO Conference.
For more information visit: www.tionetworks.com
FORWARD-LOOKING INFORMATION AND DISCLAIMERS
This news release contains certain forward-looking statements and information (collectively, “forward-looking statements”) within the meaning of applicable Canadian securities laws, including, without limitation, the planned acquisition by TIO of Globex Financial Services and its operating business, Global Express and the timing thereof; the effect of the acquisition on TIO including the expected strengthening of TIO’s position in the bill payment industry providing TIO with a comprehensive national footprint; nature of expected synergies; the expected market for the companies; expected higher revenues and gross margins; expected increase in the percentage of revenues and margins attributable to the utility industry; expanded revenue base; the anticipated accretive nature of the transaction; the formation of a key market leader; Randy Mersky remaining as president of the acquired companies; the manner of funding the acquisition; the amount that Core is expected to fund and the price per share thereof; the expectation that Core will join TIO’s board; and the amount of the final cash payment. Forward-looking statements, which may be identified by words including, without limitation, “will”, “anticipated”, “expected”, “to create”, “to make”, “to join”, “look forward”, and other similar expressions, are intended to provide information about management’s current plans and expectations regarding the transaction.
Although TIO believes that the expectations reflected in such forward-looking statements are reasonable, such statements involve risks and uncertainties that may cause actual results or events to differ materially from those anticipated and no assurance can be given that these expectations will be realized, and undue reliance should not be placed on such statements. Risk factors that could cause actual results or events to differ materially from the forward-looking statements include, without limitation, that TIO’s assumptions in making forward-looking statements may prove to be incorrect; the acquisition transaction or the Core funding transaction, or both, may not close as anticipated or at all; that the Company may not be able to obtain sufficient financing to close; that required regulatory approvals may not be obtained; risks relating to the satisfaction of the conditions to closing the transaction and the related financing arrangements; future results varying from historical results; and competition.
Certain material factors or assumptions are applied in making the forward-looking statements, including, without limitation, the assumption that future results, including without limitation, sales and financial results, will be similar to past results; expectations related to future general economic and market conditions; the assumption that no adverse material changes will occur in the business to be acquired or the markets in general; the assumption that all required regulatory approvals will be obtained; and the assumption that the timing of events will occur as anticipated. Forward-looking statements and information are based on the beliefs, assumptions and expectations of TIO’s management on the date of this news release, and TIO does not assume any obligation to update any forward-looking statement or information should those beliefs, assumptions or expectations, or other circumstances change, except as required by securities law.
Any websites referenced or linked in this press release are for convenience only and TIO does not endorse such websites nor assume any liability for the information contained therein. The information contained in this press release regarding Globex Financial Services Inc., Global Express Money Orders Inc. and Core Innovation Capital has been provided solely by them and TIO disclaims any liability with respect to such information.
About TIO Networks Corp.
TIO is a cloud-based bill payment processor serving the largest telecom, wireless, cable and utility bill issuers in North America. With more than 57,000 endpoints to its processing network, TIO symbolizes fast, convenient and secure bill paying. TIO Connect offers fast and cost effective integration options that enable an organization to use their own internal IT staff, or utilize one of TIO’s Independent Software Vendor (ISV) partners to complete the integration. For more information visit: www.TIOnetworks.com. Join the conversation on www.twitter.com/TIONetworks or like us on www.facebook.com/TIONetworks.
About Globex Financial Services, Inc.
Established in 1963, Globex Financial Services, Inc. is one of the largest money order, bill payment and prepaid wireless companies operating through thousands of retail locations in the U.S. Globex Financial Services, Inc. has processed millions of “real-time” walk-in bill payments for utility companies, merchants and municipalities. For more information on Global Express visit: www.globalexpress.net
About Core Innovation Capital
Core Innovation Capital is a leading investor in financial technologies serving the Emerging Middle Class, the 80 million Americans that generate over $1 trillion in annual income and spend more than $78 billion in fees and interest on financial services. Core partners with proven entrepreneurs and invests in disruptive financial technologies that measurably improve the lives of the Emerging Middle Class. The Core Impact Alignment investment thesis leverages social impact to create above-market financial return. For more information about Core Innovation Capital, visit www.corevc.com or follow @coreemc.
For More Information Contact:
Brett Mass, Hayden IR
John Lewis, Business Development – TIO Networks
Jennifer Maloney, Media Relations – Yulu Public Relations
Michael Azzano, Cosmo Public Relations for Core Innovation Capital
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.