This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Net1 To Acquire KSNET, A Leading Republic Of Korea Payment Processing Company

JOHANNESBURG, Sept. 16 /PRNewswire-FirstCall/ -- Net 1 UEPS Technologies, Inc. (Nasdaq: UEPS) (JSE: NT1) ("Net1" or the "Company") today announced that it has agreed to acquire 98.73% of KSNET, Inc. ("KSNet"), a leading Republic of Korea ("Korea") payment processor, for a purchase price of approximately 270 billion Korean won ("KRW"), or approximately $233 million based on current exchange rates. The Company will fund the transaction utilizing a combination of cash reserves and new debt facilities. Net1 expects the transaction to be immediately accretive to fiscal 2011 fundamental earnings (which is a non-GAAP measure).  The transaction is expected to close in the second quarter of fiscal 2011.

KSNet is the fastest growing and most profitable payment solutions provider in Korea, has the broadest product offering in the country, a base of approximately 200,000 merchants and an extensive direct and indirect sales network. Over 90% of KSNet's revenue comes from the provision of payment processing services to merchants and card issuers through its Value Added Network ("VAN"). Over the past two years, KSNet's transaction processing volume has increased at a 24% CAGR, and reached 1.4 billion transactions during calendar year 2009.

Net1 believes that the acquisition of KSNet will strengthen its long-term growth platform, and is strategically important for the following reasons:  
  • Demonstrated ability to generate strong growth and cash flow generation: KSNet has delivered impressive revenue and earnings growth, and cash flow conversion since 2007, despite the global financial crisis. During the twelve months ended June 30, 2010, KSNet generated revenue of KRW 101 billion (approximately $86 million), a year-over-year increase of 23% and grew 28% in EBITDA;
  • Sustainable growth profile on a standalone basis: According to the Bank of Korea, the total number of card transactions in Korea grew at a 23% CAGR from 2007 through 2009. KSNet is the fastest growing and most profitable transaction processor in Korea, driven by solid growth in payment card adoption and usage, a large and well established sales force, innovative personal income tax incentives which encourages use of payments cards, and expansion into higher growth adjacent markets with its banking VAN and payment gateway businesses;
  • Diverse product offering: KSNet is the only total payment solutions provider offering card VAN, payment gateway and banking VAN services in Korea. Net1 believes that this diverse product offering differentiates KSNet from other Korean payment solution providers, and allows it to cross-sell its products across its customer base. We believe this diverse offering strengthens its position with its sales agents by providing additional revenue sources to them;
  • Multiple synergistic opportunities for Net1: Net1 management has identified three key areas to drive revenue synergies:
    • KSNet's core card VAN business is similar to Net1's South African EasyPay operation, thereby creating an opportunity to incorporate new offerings such as the value-added services offered by EasyPay;
    • Korea is widely regarded as one of the more advanced users of mobile technology in the world and given KSNet's well-established relationships with mobile operators, financial institutions and retailers and its growing e-commerce processing business, Net1 has an attractive platform to potentially introduce its Mobile Virtual Card technology;
    • KSNet's presence in Korea provides an established base in Asia for Net1's business development activities in the region;
  • Revenue and earnings diversification: The acquisition of KSNet meaningfully diversifies Net1's revenues and earnings outside its core South African operations. On a pro-forma basis for fiscal 2010, KSNet would represent approximately 30% of Net1's revenue; and
  • Expansion of expertise and management team: Increase in the depth and diversity of the Net1 management team with the addition of experienced executives in Asia. The KSNet management team has significant experience and relationships within the Korean transaction processing sector as well as across multiple industries like banking, telecommunications, retail, etc.

"This transaction marks a key milestone for Net1, and fits squarely into our long-term vision of globalizing the Company, penetrating certain key growth markets, while also diversifying our business internationally," said Dr. Serge Belamant, Net1's Chairman and Chief Executive Officer. "KSNet offers us the opportunity to further capitalize on its position in a high growth market, advance its newer businesses in banking VAN and payment gateways, as well as introduce key products and services from Net1's EasyPay and Mobile Virtual Card offerings, providing a comprehensive and differentiated solution to cardholders, financial institutions  and merchants in Korea." Dr. Belamant added, "Equally important, KSNet's sustainable growth platform meaningfully enhances our geographic, customer and product diversification strategy. The management team and staff bring a wealth of experience in the Korean transaction processing market and we expect them to play a key role in driving growth for our combined company."

Net1 will host a conference call to discuss the acquisition on Friday, September 17, 2010, at 9:00 a.m. Eastern Time. To participate in the call, dial 1-800-860-2442 (U.S. only), 1-866-605-3852 ( Canada only), 0-800-917-7042 (U.K. only) or 0-800-200-648 ( South Africa only) five minutes prior to the start of the call. Callers should request "Net1 call" upon dial-in. The call will also be webcast on the Net1 homepage, Please click on the webcast link at least 10 minutes prior to the call. A webcast of the call will be available for replay on the Net1 website through October 15, 2010.

Net1 was advised by Standard Chartered Bank and Yulchon and DLA Piper US LLP provided legal counsel.

1 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
UEPS $11.92 0.00%
AAPL $93.74 0.00%
FB $117.58 0.00%
GOOG $693.01 0.00%
TSLA $240.76 0.00%


Chart of I:DJI
DOW 17,773.64 -57.12 -0.32%
S&P 500 2,065.30 -10.51 -0.51%
NASDAQ 4,775.3580 -29.9330 -0.62%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs