Optimal Payments will pay €720 million in cash and just shy of 35.5 million of its own shares to acquire CVC's holding company for the company Sentinel Topco, and co-investors including Investcorp Technology Partners, giving the target's current owners about 7.9% of the enlarged company. Skrill has €256 million of net debt.
The acquisition values Skrill at a multiple of 9.3 times EBITDA for the 12 months to September 2014 including targeted cost synergies of $40 million a year by the end of 2016, or 13.5 times EBITDA excluding the impact of synergies. Based on Optimal Payments closing price of 419 pence a share on Friday, March 20, the last trading day before the deal was announced, the transaction values the acquirer at 14 times EBITDA for its own financial year, the 12 months to December 2014.
There will be one-off costs of about $26 million to achieve the synergies, but acquirer's board believes there will be potential additional value from cross-selling opportunities and platform consolidation
As well as the rights issue, at a 60% discount to Friday's closing price, Optimal Payments has committed financing of €500 million from Bank of Montreal, Barclays Bank and Deutsche Bank. Optimal Payments' share was suspended from trading during the morning on Monday, but shot up 23.82% to 518.50 pence before the market closed.
Cyrus Kapadia, Aamir Khan and Olivier Christnacht of Lazard are financial advisers to Optimal Payments on the transaction and on the rights issue. Simon Bridges, Piers Combs, Andrew Lynn and Cameron Duncan of Canaccord Genuity are acting as Nominated Adviser, debt adviser, broker and joint bookrunner to Optimal Payments on the transaction and rights issue. Lorcan O'Shea, Yishai Fransis and Rahul Singla of Deutsche Bank are acting as joint bookrunner, while Jeffrey Couch and Neil Haycock of BMO Capital Markets are co-lead manager.
Jason Gurandiano, Matt Gehl, James Arculus, Lee Counselman, Jacques Raphael and Donovan Geissel of Deutsche Bank are advising Skrill.