Coronavirus cuts Prepaid Financial Services sale price by $117 million

The coronavirus pandemic has forced Irish fintech Prepaid Financial Services Limited (PFS) to drop its sale price by $117 million to close its deal with EML payments Limited.

The terms of the original deal with Australian payment firm EML payments Ltd. were renegotiated over the past few weeks given the turmoil caused by the coronavirus, dropping the upfront price by £94.5 million (about $117 million). In the announcement to the Australian Stock Exchange the day before the deal was set to close, the new terms showed that the upfront price had fallen by over 40%. EML is a publicly traded company that is listed on the ASX.

Regulatory approvals from the Central Bank of Ireland and the U.K.’s Financial Conduct Authority had been received prior to the deal closing.

"Our original deal was on track to close, until recent weeks, when COVID-19 started to have an impact on global stock markets. With share prices plummeting around the world, the value of FinTechs was similarly affected," said Noel Moran, CEO at PFS in a press release. "Luckily, we had built a solid, profitable business over the past 12 years thanks to the dedication of our entire team. In light of the current worldwide business reality, I believe we have achieved a great result for everyone involved. We are eager to play a pivotal role in complementing EML's sizeable international and diversified electronic money portfolio."

The deal originally announced in November 2019 called for 100% of PFS shares to be sold to EML for an upfront enterprise value of £226 million (about $280 million) excluding cash on hand plus an earn-out component of up to £55 million (about $68 million).

In the new deal, only the upfront pricing was changed, as the earnout deal remained in place at the original target. In the terms sheet presented to the ASX, the performance-based earnout which is to be paid in cash is contingent on PFS achieving agreed re-based annual EBITDA targets for the three financial years ending June 30, 2021 to June 30, 2023 reflecting growth of approximately 20% CAGR.

Since its launch, PFS reports that it has issued over 6.6 million payments cards trading in 23 currencies in 150 white label programs covering more than 1,900 clients. Total card load volume for PFS since inception is over £9 billion (about $11.2 billion).