Optimal Payments Receives FCA Go-ahead for Acquisition of Skrill
Realignment and consolidation in the online payment-processing industry continues this week with the news that Isle of Man-based Optimal Payments has received approval from the United Kingdom’s Financial Conduct Authority (FCA) for its planned acquisition of London-based Skrill Group.
The $1.2 billion deal, formally structured as a reverse takeover, was first announced in late March. Both firms are already giants in the payment-processing arena and the combined group is expected to post immediate revenues of roughly $700 per annum, largely from online and mobile applications.
The update came just days after an announcement from Optimal that the FCA had not yet completed its review. The quick turnaround and final approval from the FCA means that Optimal and Skrill can now sign off on the deal, which had previously been approved by the companies’ boards and general-shareholder deals. The finalization date has already been set for Monday, August 10th.
While noting the FCA approval, Optimal Payments execs also touted Skrill’s particular market strengths. According to an Optimal Payments announcement, “The Skrill Group is one of Europe’s leading digital payments businesses providing digital wallet solutions and online payment processing capabilities and is one of the largest pre-paid online voucher providers in Europe with its paysafecard brand. The Directors of [Optimal] continue to believe that the Acquisition (for an enterprise value of approximately €1.1 billion) will be transformational and value enhancing for Optimal Payments and its shareholders.
Optimal, of course, is the latter-day face of NETeller, the online-gambling payment processing giant of the pre-UIGEA, US-facing era. NETeller’s rapid rise and quick fall (following its DOJ-induced exodus from the States) was one of the most interesting legal and business sagas from online poker’s mainstream growth years. The company eventually left its initial home in Canada, relocating to Europe to be nearer its mainstream audience. The reworked NETeller brand family remains the central part of Optimal’s online offerings, and the company has also returned to the US via a major business deal with Caesars Interactive, the regulated US online-poker market leader.
The Skrill Group has a deep background as well. Formerly known as Moneybookers, the Skrill Group date backs to 2001, and like Optimal’s NETeller, has widespread brand recognition and a broad, multinational consumer base. Skrill brings more than 20 million registered online users to the deal’s “Enlarged Group” as part of the deal also operates the uKash brand, and has major online processing deals with Skype and eBay. Together, the new combined company will be able to offer over 100 different payment options, in at least 22 different languages and 41 different currencies.
Back in March, Optimal Payments CEO Joel Leonoff said the following when announcing the deal: “Over the past four years, we have successfully delivered significant growth in revenues and earnings for our shareholders. This growth resulted from executing our strategy to generate high levels of organic growth and to supplement this with accretive acquisitions. The acquisition of Skrill will create a global tech champion in the fast growing digital payments space and we believe represents a transformational leap forward that greatly accelerates our strategic plan. The Optimal Payments management team is extremely excited about the future prospects for the Company.”
A more recent quote from Optimal Payments Chairman Dennis Jones focuses on scalability and growth. “We are taking advantage of an exceptional opportunity,” said Jones, “to acquire a business we know very well which, combined with Optimal Payments, will be a leading UK based online payments business with the essential scale necessary to be highly successful. These opportunities are few and far between. The Board believes this transformational transaction will be earnings accretive for shareholders from the first full fiscal year of ownership, will further diversify our client base and, additionally, will enable us to deliver enhanced services to existing and prospective merchants and customers in all of our global markets.”