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Digital River to Acquire LML Payment

Zacks Equity Research

Digital River, Inc. ( DRIV) recently announced that it is set to acquire LML Payment Systems Inc. for $3.45 per share or $108.2 million.


LML Payment Systems offers financial payment solutions including credit card processing, online debit, electronic funds transfer, automated clearinghouse payment processing and authentication services to e-commerce and traditional businesses. 


The company also provides selected transactions to third-party processors and banks for authorization and settlement. 


Management believes that the acquisition will complement the company’s existing product portfolio and will enable Digital River to offer its online payment services to businesses of all sizes.


Currently, Digital River provides online payment processing services to enterprises and mid-sized merchants while LML Payment Systems processes online payments for more than 14,000 small to mid-sized merchants. 


Post acquisition, Digital River will handle online transactions worth more than $20 billion for numerous companies across a broad range of industries such as software, consumer electronics, government, utilities, event registration and mobile payments. 


In addition, Digital River plans to leverage LML Payment Systems’ ecosystem of banking, merchant, reseller and developer relationships to expand its world payment solutions and further extend LML’s white label channel solution and mobile payments solutions. 


Digital River expects to complete the transaction by the fourth quarter of 2012 or the first quarter of 2013. The acquisition is expected to be accretive to the bottom line in 2013. 


The acquisition has been approved by the respective boards of both companies and will be completed through a plan of arrangement under the Business Corporations Act (British Columbia). 


We continue to maintain our long-term Neutral recommendation on Digital River. However, we currently have a Zacks #4 Rank, which translates into a short-term rating of Sell. 

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