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NCR Gets UK's CMA Nod for Cardtronics Deal, Closes Transaction

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NCR Corporation NCR recently revealed receiving final approval from the U.K.’s Competition and Markets Authority (“CMA”) for the proposed acquisition of the world's largest non-bank ATM operator — Cardtronics Plc.

The company stated that the U.K.’s competition regulatory authority has approved the transaction without any condition. With this, the company has obtained all the regulatory consent and approvals related to the transaction, and the deal is, thus, now complete.

Transaction Detail

Notably, in late January, NCR entered into a definitive agreement to acquire Cardtronics for $2.5 billion. The former had submitted an offer to acquire the latter for $39 per share in an all-cash deal. NCR’s proposal was higher than the earlier bid made jointly by Apollo Global Management APO and Hudson Executive Capital.

NCR Corporation Price and Consensus

NCR Corporation Price and Consensus
NCR Corporation Price and Consensus

NCR Corporation price-consensus-chart | NCR Corporation Quote

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, 2021, Cardtronics noted 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 Acquisition

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

This buyout is anticipated to fortify the U.S.-based company’s NCR-as-a-service strategy. Cardtronics’ robust debit network will further expand NCR’s payments platform, and help it connect to retail and bank customers, thereby facilitating customer acquisition.

Moreover, the integration will give the company access to Cardtronics’ installed base of ATM network across multiple regions. This will support the company to enhance its scale of business and boost 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.

Apart from these, the buyout bodes well for NCR’s steady focus on enhancing its software and services revenue mix, and driving margin expansion by boosting the company’s recurring revenues.

NCR believes the acquisition of Cardtronics would be accretive to its adjusted EPS in the first full year following the transaction’s conclusion. Additionally, it expects to achieve $100-$120 million in operating cost synergies by the end of 2022.

Zacks Rank & Stocks to Consider

NCR currently carries a Zacks Rank #3 (Hold).

Better-ranked stocks in the broader technology sector include Microsoft MSFT and Texas Instruments TXN, all carrying a Zacks Rank of 2 (Buy), at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The long-term earnings growth rate for Microsoft and Texas Instruments is currently pegged at 11.5% and 9.3%, respectively.

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Apollo Global Management, Inc. (APO) : Free Stock Analysis Report

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