Expands PayPal’s Reach Into the U.S. Bill
Payment Channel with More Than 10,000 Supported Billers, 65,000
Over-the-Counter Locations and 900 Operated Kiosks
Supports PayPal’s Mission to Advance Financial
Inclusion and Addresses a Key Need of Underserved Consumers
PayPal Holdings, Inc. (Nasdaq: PYPL) and TIO Networks Corp.
(TSXV: TNC), a cloud-based multi-channel bill payment processing
and receivables management company, today announced a definitive
agreement under which PayPal will acquire TIO for $3.35 CAD ($2.56
USD) per share in cash or an approximate $304 million CAD ($233
million USD) equity value. The purchase price represents a premium
of 25.2% to TIO’s 90-trading day volume-weighted average price as
of February 13, 2017, and 22.6% to the 20-trading day
volume-weighted average price as of January 9, 2017, the trading
day immediately preceding the date TIO entered into exclusive
negotiations with PayPal.
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TIO is a leading multi-channel bill payment processor in North
America and processed more than $7 billion USD in consumer bill
payments in fiscal 2016. TIO serves 14 million consumer bill pay
accounts* and offers convenient solutions for expedited bill
payment services to financially underserved consumers. The company
has more than 10,000 supported billers and numerous direct
relationships with billers, which enable TIO to quickly process
telecom, wireless, cable and utility bill payments for TIO’s
customers. Using TIO’s approximately 900 operated self-service
kiosks, approximately 65,000 retail walk-in locations, and mobile
and web solutions, customers can conveniently pay their bills while
avoiding the service interruptions and financial penalties
associated with missed payment deadlines.
Dan Schulman, President and CEO of PayPal, said, “By acquiring
TIO and integrating bill payment into our global payments platform,
PayPal adds another key service in our efforts to become a part of
a consumer’s everyday financial life. Worldwide,
more than 2 billion** people do not have affordable
access to basic financial services, making it difficult and
expensive for consumers to carry out basic financial tasks,
including bill payment. TIO’s digital platform, and physical
network of agent locations make paying bills simpler, faster, and
more affordable. We are excited by the opportunity to extend this
valuable service to our existing customers and welcome new billers
and customers to PayPal."
Hamed Shahbazi, Chairman and CEO of TIO, remarked, “We founded
TIO to make speed and access part of the bill payment experience
for the underserved, and we believe that we have created affordable
products to serve the needs of all customers. Our mission fits
perfectly with PayPal’s vision to democratize money. As part of the
PayPal team, we believe we will accelerate our growth through
expanded distribution and continue increasing access to more
billers and services.”
Expected Strategic Benefits of the TIO
Acquisition
- Aligned with PayPal’s Vision:
TIO supports PayPal’s vision of democratizing money by giving
consumers more convenient and affordable ways to pay their
bills.
- Expands Market Opportunity: TIO
accelerates PayPal’s entry into bill payments with 14 million
consumer bill pay accounts*, approximately 60 million transactions
processed in TIO’s fiscal 2016 and a processing network that
includes more than 10,000 billers.
- Extends Consumer Value
Proposition: PayPal’s intention is to offer TIO’s valuable
service to PayPal’s customers within its online and mobile
experiences.
Upon closing of the acquisition, TIO will operate as a service
within PayPal.
Financial Highlights of
Acquisition
PayPal intends to fund the transaction with cash on its balance
sheet. There will be no change to PayPal’s previously communicated
fiscal 2017 guidance and three-year outlook based on the
acquisition of TIO. For the fiscal year ended July 31, 2016, TIO
generated $74.7 million CAD in revenue ($57.1 million USD) and
$10.6 million CAD in adjusted EBITDA ($8.1 million USD). TIO
defines EBITDA as earnings before interest, tax, depreciation and
amortization and adjusted EBITDA as EBITDA plus stock-based
compensation, non-recurring transaction and restructuring
expenses.
Transaction Details
The acquisition is expected to close in the second half of 2017,
and will be completed by way of a plan of arrangement under the
Business Corporations Act (British Columbia).
The completion of the transaction will be subject to the
approval of at least two-thirds of the votes cast at a special
meeting of TIO shareholders and optionholders present in person or
represented by proxy at the meeting, by: (i) TIO shareholders; (ii)
by TIO shareholders and optionholders, voting together as a single
class; and (iii) a majority of the votes cast by TIO shareholders
present in person or represented by proxy at the meeting, excluding
for this purpose votes attached to the TIO common shares held by
persons described in items (a) through (d) of Section 8.1(2) of
Multilateral Instrument 61-101 – Take-Over Bids and Special
Transactions.
The meeting of shareholders and optionholders is expected to
take place in April, 2017. In addition to TIO securityholder
approvals, the transaction is also subject to other closing
conditions, including the receipt of approvals relating to TIO’s
money transmitter licenses, the expiration or early termination of
the applicable pre-merger waiting period under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, and court
approval in British Columbia, Canada.
The transaction has been approved by the boards of directors of
each of TIO and PayPal, and the TIO Board recommends that TIO
shareholders and optionholders vote in favor of the Arrangement.
The recommendation of the TIO Board was based on the recommendation
of a special committee of independent directors of TIO. The
financial advisor to TIO, Raymond James Ltd., has provided a
fairness opinion to the special committee and board of directors of
TIO that, subject to the assumptions, limitations and
qualifications set out in such fairness opinion, the consideration
to be received by TIO shareholders pursuant to the plan of
arrangement is fair, from a financial point of view, to the TIO
shareholders.
In addition, TIO shareholders, directors and officers, including
funds managed by Core Innovation Capital, Napier Park Financial
Partners, Edison Partners, Inter-Atlantic Advisors and Inductive
Capital, representing approximately 50.4% of the issued and
outstanding common shares have agreed to vote their shares in favor
of the transaction. The transaction includes customary deal
protection provisions, including non-solicitation of an alternative
transaction and a termination fee payable to PayPal under certain
circumstances.
Further information regarding the transaction will be contained
in the management information circular which is expected to be
mailed to TIO shareholders in March in connection with the special
meeting of TIO shareholders to be held to consider the transaction.
Copies of the definitive agreement and the management information
circular will also be available under TIO’s SEDAR profile at
www.sedar.com. In addition, free copies of the documents may be
obtained from TIO’s investor relations website at
http://corporate.tionetworks.com/ or by contacting TIO investor
relations at investor@tio.com. All TIO shareholders are urged to
read the management information circular as it will contain
additional important information concerning the transaction.
Advisors
Perella Weinberg Partners LP is acting as financial adviser to
PayPal, and Sidley Austin LLP and Blake, Cassells & Graydon LLP
are acting as legal advisers on the transaction. Raymond James Ltd.
is acting as financial adviser to TIO, and Davies Ward Phillips
& Vineberg LLP, and Fasken Martineau DuMoulin LLP and Morrison
& Foerster LLP, are acting as legal advisers for the TIO
Special Committee and TIO, respectively.
NOTES:
$1 CAD = $0.764 USD
* Consumer bill pay accounts represent the total number of
accounts between consumers and billers. A consumer may have a
relationship with more than one biller and may have more than one
account.
** Source: World Bank Global Findex 2014.
About PayPal
Fueled by a fundamental belief that having access to financial
services creates opportunity, PayPal (Nasdaq: PYPL) is committed to
democratizing financial services and empowering people and
businesses to join and thrive in the global economy. Our open
digital payments platform gives PayPal’s nearly 200 million active
account holders the confidence to connect and transact in new and
powerful ways, whether they are online, on a mobile device, in an
app, or in person. Through a combination of technological
innovation and strategic partnerships, PayPal creates better
ways to manage and move money, and offers choice and flexibility
when sending payments, paying or getting paid. Available in more
than 200 markets around the world, the PayPal platform, including
Braintree, Venmo and Xoom, enables consumers and merchants to
receive money in more than 100 currencies, withdraw funds in 56
currencies and hold balances in their PayPal accounts in 25
currencies. For more information on PayPal,
visit https://www.paypal.com/about. For PYPL financial
information, visit https://investor.PayPal-corp.com.
About TIO Networks
TIO is a cloud-based multi-channel bill payment processing and
receivables management provider, serving the largest telecom,
wireless, cable, and utility bill issuers in North America. TIO
integrates with the back office of billing systems to accept,
validate, and collect payments via self-service kiosk, retail
walk-in, mobile, and web solutions. With approximately 60 million
transactions processed in fiscal 2016 and a processing network that
serves more than 10,000 billers, TIO symbolizes fast, convenient,
and secure access to expedited bill payment services.
Visit www.tionetworks.com or join the conversation on Twitter
and Facebook.
Neither TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in policies of the TSX Venture
Exchange) accepts responsibility for the adequacy or accuracy of
this release.
Forward Looking Statements
This announcement contains “forward-looking” statements within
the meaning of applicable securities laws. Forward-looking
statements and information relate to future events and future
performance and reflect PayPal’s and TIO’s expectations regarding
the impact of this transaction on PayPal’s and TIO’s financial and
operating results and business, the operation and management of TIO
after the acquisition, the anticipated funding for the transaction,
and the timing of the closing of the acquisition. Forward-looking
statements may be identified by words such as “seek”, “believe”,
“plan”, “estimate”, “anticipate”, expect”, “intend”, and statements
that an event or result “may”, “will”, “should”, “could”, or
“might” occur or be achieved and any other similar expressions.
Forward-looking statements involve risks and uncertainties which
may cause actual results to differ materially from the statements
made. Factors that could cause or contribute to such differences
include, but are not limited to, the timing and possible outcome of
securityholder, regulatory and court approvals in connection with
the transaction, the possibility that the transaction may not
close, the reaction to the transaction of TIO’s customers and
business partners, the reaction of competitors to the transaction,
the retention of TIO employees, PayPal’s plans for TIO, economic
and political conditions in the global markets in which PayPal and
TIO operate, the future growth of PayPal’s and TIO’s businesses and
the possibility that integration following the transaction may be
more difficult than expected. More information about these and
other factors can be found in PayPal Holdings, Inc.’s most recent
Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current
Reports on Form 8-K and other filings with the Securities and
Exchange Commission (the “SEC”), and its future filings with the
SEC, and in TIO’s Management’s Discussion and Analysis for the
quarter ended October 31, 2016 filed under TIO’s SEDAR profile at
www.sedar.com.
There are no assurances PayPal and TIO can fulfill
forward-looking statements and information. Such forward-looking
statements and information are only predictions based on current
information available to the respective management teams as of the
date that such predictions are made; actual events or results may
differ materially as a result of risks facing PayPal and TIO, some
of which are beyond PayPal’s and TIO’s control. Although PayPal and
TIO believe that any forward-looking statements and information
contained in this press release are based on reasonable
assumptions, readers cannot be assured that actual outcomes or
results will be consistent with such statements. Accordingly,
readers should not place undue reliance on forward-looking
statements and information.
Neither PayPal nor TIO accept any responsibility for any
financial or operational information contained in this press
release relating to the business, results of operations or
financial condition of the other. Each of PayPal and TIO expressly
disclaims any obligation or undertaking to disseminate any updates
or revisions to any forward-looking statements contained herein to
reflect any change in the expectations with regard thereto or any
change in events, conditions or circumstances on which any such
statement is based.
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version on businesswire.com: http://www.businesswire.com/news/home/20170214006370/en/
For PayPalInvestors:Gabrielle RabinovitchSenior Director,
Investor Relationsgrabinovich@paypal.comorMedia:Martha CassSenior
Director, Corporate Communicationsmcass@paypal.comorFor
TIOInvestors:investor@tio.com