EVERTEC closes a popular Transac – GuruFocus.com
EVERTEC, Inc. (NYSE: EVTC) (“Evertec” or the “Company”) today announced that the Company has completed the previously announced popular transaction and acquisition of BBR, SpA (“BBR”).
As part of the Popular Transaction, the Company amended and extended key commercial agreements with Banco Popular de Puerto Rico (“BPPR”) and its parent company, Popular, Inc. (NASDAQ: BPOP) (“Popular”). As previously reported, the new agreement includes a 10-year extension of the Merchant Acquiring Independent Sales Organization Agreement (the “ISO Agreement”), a 5-year extension of the Network Participation Agreement ATH and a 3-year extension of the Master Services Agreement (“MSA”). The ISO agreement, which sets out the terms of the merchant acquiring relationship with Popular, will now include a revenue sharing clause with Popular. Changes to the MSA include the elimination of the exclusivity requirement, the inclusion of annual MSA minimums through 2028, a 10% discount on select MSA services beginning in October 2025, and adjustments to the previous CPI price indexation clause. The agreement also provides for the sale to Popular of certain assets in exchange for approximately 4.6 million Evertec shares held by Popular. In addition, following the closing of the Popular transaction, Popular has agreed to take certain steps to ensure that Evertec is no longer considered a “subsidiary” of Popular for purposes of the Bank Holding Company Act, including reducing the Popular’s voting stake in Evertec to 4.5% over the next three months through the sale of shares or conversion to non-voting preferred stock.
Goldman Sachs & Co. LLC served as lead financial advisor to Evertec. Evercore also served as financial advisor to Evertec.
The Company also completed the acquisition of 100% of the outstanding shares of BBR for a total purchase price of CLP 48,600 million, or approximately USD 53 million. Based in Santiago, Chile, BBR is a payment solutions and commerce technology company operating in Chile and Peru.
Mac Schuessler, President and CEO, said, “We are delighted to complete these two transactions. The popular transaction extends our relationship with our largest customer while the acquisition of BBR continues to expand our footprint in Latin America, two important steps in continuing to execute our long-term growth strategy. »
EVERTEC, Inc. (NYSE: EVTC) is a leading full-service transaction processing company in Puerto Rico, the Caribbean and Latin America, offering a wide range of merchant acquiring, payment services and business process management services. Evertec owns and operates the ATH® Network, one of the leading Personal Identification Number (“PIN”) debit networks in Latin America. In addition, the company operates a system of electronic payment networks and offers a full suite of services for basic banking, cash processing and fulfillment in Puerto Rico, which process more than three billion transactions annually. The Company also offers technology outsourcing in all of the regions it serves. Based in Puerto Rico, the company operates in 26 Latin American countries and serves a diverse customer base of leading financial institutions, merchants, enterprises and government agencies with “mission-critical” technology solutions. For more information, visit www.evertecinc.com.
Certain statements in this press release constitute “forward-looking statements” within the meaning of and subject to the protection of the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve known and unknown risks, uncertainties and other factors. . that could cause EVERTEC’s actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Statements preceded by, followed by or which otherwise include the words “believes”, “expects”, “anticipates”, “intends”, “projects”, “estimates” and “plans” and expressions Similar future or conditional verbs such as “will”, “should”, “would”, “may”, and “could” are generally forward-looking in nature and not historical fact. All statements that refer to expectations or other characterizations of future events, circumstances or results are forward-looking statements.
Various factors that could cause actual future results and other future events to differ materially from those estimated by management include, but are not limited to: the Company’s dependence on its relationship with Popular, Inc. (“Popular”) for a significant portion of its revenue pursuant to the Company’s Master Services Agreement (“MSA”) with them, and to expand the Company’s merchant acquisition business; as a regulated institution, the likelihood that the Company will be required to obtain regulatory approval before engaging in certain new businesses or businesses, whether organically or by acquisition, and its potential inability to obtain such timely approval or none at all, which could make transactions more expensive or impossible to complete, or make us less attractive to potential sellers; the Company’s ability to renew its customer contracts on terms favorable to the Company, including the contract with Popular, and any material concessions the Company may grant to Popular with respect to price or other key terms arising from any litigation or in anticipation of the negotiation of the extension of the MSA, both for the current term and for any possible extension of the MSA; the Company’s dependence on its processing systems, its technological infrastructure, its security and fraudulent payment detection systems, as well as the Company’s personnel and certain third parties with whom it does business, and risks to the Company’s business if its systems are hacked or otherwise compromised; the Company’s ability to develop, install and adopt new computer software, technologies and systems; a reduced customer base due to consolidations and failures in the financial services industry; the credit risk of the Company’s merchant customers, for which it may also be responsible; maintaining the market position of the ATH network; a decline in consumer confidence, whether due to a global economic downturn or otherwise, resulting in reduced consumer spending; the Company’s dependence on credit card associations, including any adverse changes in credit card association or network rules or fees; changes in the regulatory environment and changes in international, legal, tax, political, administrative or economic conditions; the geographic concentration of the Company’s business in Puerto Rico, including its business with the government of Puerto Rico and its intermediaries, which face serious political and fiscal challenges; additional adverse changes in general economic conditions in Puerto Rico, whether due to the government debt crisis or otherwise, including the continued migration of Puerto Ricans to the continental United States, which could adversely affect the the Company’s customer base, general consumer expenses, the Company’s operating costs and the Company’s ability to hire and retain qualified employees; operate an international business in Latin America and the Caribbean, in jurisdictions with potential political and economic instability; the Company’s ability to protect its intellectual property rights against infringement and to defend against infringement actions brought by third parties; the Company’s ability to comply with US federal, state, local and foreign regulatory requirements; changing industry standards and adverse changes in global economic, political and other conditions; the Company’s level of indebtedness and the restrictions contained in the Company’s borrowing agreements, including secured credit facilities, as well as indebtedness that may be incurred in the future; the Company’s ability to prevent a cybersecurity attack or breach of its information security; the possibility that the Company will lose its preferential tax rate in Puerto Rico; the possibility of future catastrophic hurricanes, earthquakes and other potential natural disasters affecting the Company’s major markets in Latin America and the Caribbean; the uncertainty related to the effect of the stoppage of the London Interbank Offered Rate at the end of 2021; and the continued impact of the COVID-19 pandemic and measures taken in response to the outbreak, on the Company’s resources, net income and liquidity due to current and future disruptions to operations as well as the macroeconomic instability caused by the pandemic.
Consideration should be given to the areas of risk described above, as well as the risks set forth under the headings “Forward-Looking Statements” and “Risk Factors” in our reports that we file from time to time with the SEC, as part of considering any forward-looking statements that may be made by us and our businesses generally. We undertake no obligation to publicly release any revisions to forward-looking statements, to report events, or to report the occurrence of unforeseen events, except as required to do so by law.
See the source version on businesswire.com: https://www.businesswire.com/news/home/20220701005036/en/