Share price of
) increased 11.9% to close at $36.21 at yesterday's close as the
automated consumer financial services provider inked a deal to
acquire Welch ATM for $160 million in cash. Following the
acquisition, Cardtronics will boast of 109,600 ATMs including
92,500 retail ATMs located in the United States.
The acquisition is expected to close in the third quarter, pending
regulatory approvals established by the Hart-Scott-Rodino Act, as
well as other closing conditions.
This transaction will bring together two premier retail ATM service
providers with complementary customer bases and sales capabilities.
Cardtronics has expanded both its domestic and international
operations through acquisitions. This inorganic strategy has been
well supported by its strong cash position and retained earnings.
The company provides ATM services at well known retailers in high
Welch ATM for its part successfully delivers ATM services to
mid-market retailers and ATM branding to mid-tier banks and credit
Hence, the addition of Welch ATM will strengthen Cardtronics'
market position besides giving a boost to revenue growth. This will
also help the company to realize cost synergies, generate
additional value for its retailer and financial institution
customers as well as enhance shareholder value.
The merged entity will offer ATM services to retailers of the likes
Rite Aid Corp.
). While Walgreens' total portfolio has 5,100 ATMs across its
nationwide presence, Welch ATM will add 3,100 company-owned, Rite
Aid-located ATMs to Cardtronics' chain.
Needless to say, Cardtronics and Welch ATM together will offer
expansive services to a wider customer base, improve operational
efficiencies, provide extensive ATM services across all market
segments and bring ATM branding and retailer traffic solutions.
Cardtronics anticipates the acquisition to be accretive to earnings
by next year.
The Zacks Consensus Estimate for 2014 and 2015 is currently
pegged at $2.07 and $2.40, respectively. We expect the number to
rise as analysts accommodate the accretion from acquisition in
On the completion of the transaction, Welch ATM founder and CEO
Hewitt will join the leadership team at Cardtronics as executive
vice president, Financial Institution and Retail Sales and
Cardtronics currently holds Zacks Rank #3 (Hold). Investors
interested in the business service provider's space might consider
Avis Budget Group, Inc.
) with a Zacks Rank #1 (Strong Buy).
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CARDTRONICS INC (CATM): Free Stock Analysis
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