Vancouver-based expedited bill payment company TIO Networks Corp. has entered into an agreement to acquire Globex Financial Services, Inc., and its operating business Global Express Money Orders, Inc. (“Global Express”). Globex is a leading bill payment services provider to some of the largest utilities in the United States. The acquisition of Globex Financial Services, Inc. will strengthen TIO’s position in the bill payment industry and provide TIO with a national footprint. It is anticipated that revenue synergies will include the cross selling of TIO’s innovative mobile payment, self-service kiosk and financial wallet technologies to an expanded customer base. The combined companies will offer bill payment services to millions of consumers across the US and Canada.
In 2012, Globex generated over US$10M in revenues at gross margins that are significantly higher than TIO’s historical gross margins. With this acquisition, TIO will enjoy significantly higher consolidated revenues and gross margins as well as a more diversified revenue base across customers, geographies and industries. Upon closing, the percentage of TIO’s revenue and margins attributable to the utility industry will increase. The transaction is anticipated to be accretive after one-time deal and integration expenses.
“We are very pleased to welcome Global Express and its valued employees and partners to the TIO Family,” said Hamed Shahbazi, Chairman and CEO of TIO Networks. “The combination of TIO and Global Express will create a formidable market leader in key segments of the underbanked financial services marketplace.”
“Over the past couple of decades, Globex has built a strong and stable bill payment business as well as a comprehensive retail footprint in the eastern USA which complements TIO’s existing retail network,” said Randy Mersky, CEO of Globex, “We look forward to opportunities to expand our business in combination with TIO’s industry-leading offerings.”
The transaction is expected to close later this year after regulatory approvals and requirements have been satisfied pursuant to the jurisdictions both companies operate in. Globex Shareholders shall be compensated by a one-time pre-closing dividend by Globex in addition to US $8 million from TIO Networks.
Randy Mersky, President of Globex and Global Express and the largest shareholder of Global, will remain as president of Globex after closing. TIO will be funding the transaction with a combination of cash on hand, debt and $3 million in equity issued to Core Innovation Capital at a price of $0.35/share upon closing of the transaction.
“Underbanked consumers represent the next great market opportunity in the United States, and TIO has provided visionary and meaningful services to this Emerging Middle Class for many years,” said Arjan Schutte, founder and managing partner of Core Innovation Capital. “TIO’s network of self-service kiosks and powerful web and mobile payment tools are a perfect fit for Globex and their deep penetration in the utility bill payment industry. We are excited to partner with both TIO and Globex, and look forward to helping them expand their business.”
The acquisition and related financing remain subject to approval of the TSX-V. A conference call to discuss the transaction noted above will be held later today at 9 a.m.PST/12p.m. EST. To participate in the call please dial 416-644-3426 in Toronto or Toll free, 1-800-731-5319 and request the TIO Conference.