9th Jan 2006 07:00
9 January 2006Sage acquires US merchant services provider, VerusThe Sage Group plc ("Sage") has agreed to acquire Verus Financial Management,Inc. ("Verus") from Financial Technology Ventures and its other shareholders,for an enterprise value of approximately ‚£184 million, to be paid in cash.Verus is a merchant services business specialising in credit card and chequeprocessing for small and medium-sized businesses ("SMEs") based in the US inNashville, Tennessee. The acquisition is expected to complete within the nextmonth, subject to regulatory approvals.Verus is a leading provider of merchant services in North America. Merchantservices support retail, business to business and e-commerce businesses inprocessing customer transactions through credit cards, debit cards and cheques.Verus has a customer base of 101,000 small and medium-sized merchants in theUS, including speciality retailers, petrol stations, restaurants, propertymanagers and motor dealerships. Verus revenues come from services fees linkedto processed sales transactions.Payment processing services are becoming an increasingly important businessprocess requirement for North American SMEs, not only in managing payments toemployees through payroll services, but also in managing transactions withcustomers through merchant services such as those provided by Verus. The marketfor merchant services is growing strongly, underpinned by growth in the USretail sector, wider adoption of e-commerce by customers and increased use ofcredit and debit cards. Verus will form the core of Sage's North AmericanMerchant Services Division, complementing Sage's existing North AmericanPayroll Services.Verus has grown rapidly organically, following a series of acquisitions in 2002and 2003. Revenue for the year ended 31 December 2005 was approximately ‚£36million* (2004: ‚£29m*), representing growth of approximately 26% on the prioryear. Operating profit before depreciation and amortisation was approximately ‚£12 million* (2004: ‚£4m*), having grown strongly during the year as a result ofthe significant revenue growth and a consistent operating cost base. At 31December 2005, Verus had gross assets of approximately ‚£14 million*.Verus services include point of sale transaction processing and customervalidity checks. This process includes a validation on each transaction's riskso that individual sales can be queried if appearing unusual. To complete eachtransaction, Verus transfers cash directly from the card- or cheque-issuingbank to the merchant's bank. The merchant also receives statements andanalysis, which can be used as inputs to accounting software.Within the Sage customer base, trials have shown a clear demand for linkingpayment processing services with accounting software, so that dual data entryis eliminated and data quality is ensured. To realise this additional long-termrevenue opportunity, Sage will enhance the value of Verus services byintegrating them with Sage accounting software.Paul Walker, Sage Chief Executive, commented, "Acquiring Verus expands ourbusiness management solutions into a new and growing market, where SMEs areshowing clear demand for more automation of their business processes. For ourexisting customers, Verus will provide merchant payment services that can belinked to their existing Sage accounting software. For new customers, these newpayment services, in addition to our payroll services and customer relationshipmanagement products, further broaden the appeal of Sage solutions beyond pureaccounting".*All financial information calculated on the basis of ‚£1 = $1.77. 2005 figuresare unaudited.A conference call to discuss this announcement will be held at 9.30am today.The dial-in number is +44 208 3223 183. Presentation material, to be referredto during the call, will be available at www.sage.com/investors/verus from 9:15am.EnquiriesThe Sage Group plc +44 (0) 191 294 3068Paul Walker, Chief ExecutivePaul Harrison, Finance DirectorPhil Branston, Investor RelationsTulchan +44 (0) 20 7353 4200Julie Foster, Kirstie HamiltonNotes to editorsThe Sage Group plc is a leading international supplier of accounting andbusiness management software solutions and related products and services forsmall to medium-sized enterprises. Formed in 1981, Sage was floated on theLondon Stock Exchange in 1989 and the Group now employs over 10,000 peopleworldwide.ENDSAGE GROUP PLCRelated Shares:
Sage Group