Paypoint plc (LON:PAY) today announces that it has signed an agreement to acquire card payments and card terminal leasing businesses Handepay Limited and Merchant Rentals Limited. The cash consideration for the acquisition is expected to be £70 million on a cash free debt free basis, after closing balance sheet adjustments.

Regarding the business rationale for the deal, PayPoint explains that card payments in the UK continue to grow and have been the preferred payment method since 2016, with significant increases in usage seen over the Covid-19 pandemic. However, there remains substantial growth potential, with approximately 2 million SMEs still not accepting card payments.

The acquisition of Handepay will create a combined national card payments business with significant customer diversity: over 30,000 SMEs, spanning the grocery, auto trade, clothing, household goods and hospitality sectors.

Mark Latham, currently Chief Commercial Officer at Handepay, will join the PayPoint Executive Board as Card Services Director, responsible for the combined cards portfolio. Ian Kennedy, currently Sales Director at Handepay, will join the business as Sales Director leading both the PayPoint and Handepay sales teams, reporting to Ben Ford, PayPoint’s Retail Services Director. Andy Peake will continue as CEO of Handepay until completion, and then will act as a consultant to PayPoint.

The acquisition is subject to regulatory approvals and, therefore, completion is anticipated to take place in January 2021. PayPoint has extended its current financing facility of £75 million to £95 million which will be used to fund the acquisition.

Nick Wiles, Chief Executive Officer of PayPoint plc, said:

“Our acquisition of Handepay and Merchant Rentals will significantly increase our card payments capability and broaden our SME customer base. This important step refocuses PayPoint towards a core growth area and creates synergies through cross selling of other PayPoint services and leveraging the scale of the combined business”.