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NCR Confirms Proposal to Buy Cardtronics for $39 Per Share

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Zacks Equity Research
·3 min read
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NCR Corporation NCR recently confirmed that it has submitted an offer to acquire Cardtronics CATM for $39 per share in an all-cash deal. NCR’s proposal is higher than the earlier bid made jointly by Apollo Global Management APO and Hudson Executive Capital.

On Dec 15, 2020, Cardtronics entered into a definitive agreement to be acquired by funds managed by affiliates of Apollo Global Management and Hudson Executive Capital, for $35 per share in cash. The firms had earlier proposed to acquire it for $31 per share.

Later, on Jan 7, Cardtronics revealed that it had received an unsolicited proposal from a third-party to acquire it for $39 per share in cash, subject to a non-disclosure agreement.

Rationale Behind the Proposed Acquisition

Cardtronics processes value-added payment transactions and provides ATM solutions to financial service providers to aid in-store traffic and retail transactions. Moreover, it enables cash transactions at more than 285,000 ATMs across 10 countries. It also provides a retail-based surcharge-free ATM network through its Allpoint Network across more than 55,000 locations.

Notably, the proposed acquisition is expected to drive the acceleration of the NCR-as-a-service strategy. Cardtronics’ strong debit network will further expand NCR’s payments platform and help it connect to retail and bank customers, thereby aiding customer acquisition.

Moreover, the integration will give the company access to Cardtronics’ installed base of ATM network across multiple regions. This will aid the company to enhance its scale of business and boost its cash flows. It will also help the company capitalize on the ongoing transition of the banking industry toward outsourcing of ATM operations and branch rationalization.

Additionally, the buyout bodes well for NCR’s steady focus to advance its software and services revenue mix and drive margin expansion by increasing its recurring revenues.

Solid Momentum in Banking Business to Aid Top Line

NCR’s shares have gained 6.7% over the past year against the Zacks Computer - Integrated Systems industry’s decline of 8.4%.

This Zacks Rank #3 (Hold) company significantly benefits from the ongoing digital transformation across the banking industry, which has accelerated due to the global pandemic. This has bolstered demand for its digital banking solutions across banks and financial institutions. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

In December 2020, NCR’s Digital First Banking platform, including its Channel Services Platform and NCR D3 Digital Banking solutions, was selected by Wintrust Financial Corporation WTFC to enhance customer experience with innovative digital banking capabilities across 180 locations.

Further, First Horizon Bank migrated its customers to NCR’s digital banking platform to provide a consistent and intuitive digital banking experience. Also, it is using the NCR D3 platform to help small businesses better manage their financial health.

Moreover, NCR has 24 million digital users on its digital banking platform, reflecting growth of 24% year over year. Its services are implemented by 650 banks and credit unions. Further, the company expects revenues of $3.1 billion from its banking business in 2020.

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NCR Corporation (NCR) : Free Stock Analysis Report
 
Cardtronics PLC (CATM) : Free Stock Analysis Report
 
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Apollo Global Management, Inc. (APO) : Free Stock Analysis Report
 
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