Lesaka Technologies, Inc. (Nasdaq: LSAK; JSE: LSK) (“Lesaka”)
has signed a definitive agreement to acquire Adumo RF (Pty) Ltd
(“Adumo”) for ZAR 1.59 billion ($85.9 million translated at the
prevailing rate $1: ZAR 18.50 as of May 7, 2024). The transaction
is subject to shareholder and regulatory approvals. The purchase
consideration1 will be settled through the combination of an
issuance of 17,279,803 shares of Lesaka common stock to Adumo’s
current ultimate shareholders plus ZAR 232 million ($12.5 million)
in cash, funded by internal cash resources and external financing.
Adumo’s ultimate shareholders include Apis Growth Fund I, a private
equity fund managed by Apis Partners LLP (“Apis”), African Rainbow
Capital (“ARC”), the largest shareholder of Crossfin Holdings (RF)
Pty Ltd (“Crossfin”), as well as the International Finance
Corporation and Adumo management.
After giving effect to the acquisition, Lesaka’s
ecosystem will serve 1.7 million active consumers, 119,000
merchants, and process over ZAR 250 billion in throughput (ZAR 40
billion card, ZAR 100 billion VAS and ZAR 110 billion cash) per
year. The Group will have over 3,300 employees operating on the
ground in 5 countries: South Africa, Namibia, Botswana, Zambia, and
Kenya. The acquisition reinforces Lesaka’s position as natural
consolidator of Southern African Fintech and will enhance our
strengths in both the consumer and merchant markets and follows the
successful integration of the Connect and Kazang businesses and the
recent acquisition of Touchsides.
Adumo serves approximately 23,000 active
merchants. Its primary operations include card acquiring,
integrated payments and reconciliation services processing more
than ZAR 24 billion ($1.3 billion) in throughput per year. The
company’s corporate card services cover over 245,000 card holders
supporting payroll, incentives, rewards, and expense management.
Adumo ISV, also known as GAAP, is the largest POS and
Software-as-a-Service solutions provider to the hospitality sector
in Southern Africa.
Commenting on the transaction, Lincoln
Mali, CEO of Lesaka Southern Africa, said: “We are
thrilled to welcome the Adumo team into the Group and Adumo CEO
Paul Kent onto our executive leadership team. Adumo’s customer base
provides us access to more than 245,000 consumers and to payment
technologies that we can incorporate into our existing operations.
The pending acquisition of Adumo is another significant milestone
for Lesaka as we build the top fintech platform in Southern
Africa.”
Steve Heilbron, Head of Corporate
Development at Lesaka, added: “This is a landmark deal for
us. We are excited to welcome respected shareholders Apis and ARC.
The augmentation of product offerings broadens our value
proposition and enhances our ability to be disruptive and solve for
our merchants’ pain points.”
Adumo Co- Founder and Chief Executive
Paul Kent expressed his excitement about the partnership:
“We look forward to joining forces with the Lesaka team and
contributing to the continued success of the Lesaka story. Our
combined offering will significantly enhance the customer value
proposition, and it is a natural fit considering our respective
strengths and technology offerings.”
Crossfin, who was instrumental
in the initial formation and growth of Adumo since 2017,
Chief Executive, Dean Sparrow said: “We are very
pleased to have found an exceptional home for the Adumo Group and
see this next step in Adumo’s growth journey as an incredibly
exciting and logical evolution for the business, its customers and
staff alike.”
Matteo Stefanel and Udayan Goyal,
Co-Founders and Managing Partners of Apis Partners: “Apis
has enjoyed a very successful partnership with Adumo over the past
few years, supporting the company with significant capital raises
and coordinating key acquisitions. We look forward to being a part
of the exciting new chapter with Lesaka, which we expect will bring
continued success to the business.”
The transaction is expected to close in the
third calendar quarter of 2024 and is subject to shareholder and
regulatory approvals and satisfaction of customary closing
conditions.
- The number of
shares to be issued was calculated based on the Base Purchase
Consideration, which is defined in the Sale Agreement as an amount
of ZAR 1.59 billion ($85.9 million), less the ZAR 232 million
($12.5 million) cash payment, implying a value per share of $4.25
((ZAR 1.59 billion – ZAR 0.232 billion)/ 17,279,803). $1: ZAR
18.50.Based on the 3 month and 6 month volume weighted average
price per Lesaka share (“VWAP”) to 5 May 2024, using an exchange
rate of ZAR 18.50 to $1, this implies a premium of 11% and 16%
respectively.
Advisors
Financial advisor to Lesaka: Rand Merchant Bank
(a division of FirstRand Bank Limited). Legal advisor to Lesaka:
Werksmans
Adumo and the sellers were advised by Webber
Wentzel.
About Lesaka
(www.lesakatech.com)
Lesaka Technologies, (Lesaka™) is a South
African Fintech company that utilizes its proprietary banking and
payment technologies to deliver superior financial services
solutions to merchants (B2B) and consumers (B2C) in Southern
Africa. Lesaka’s mission is to drive true financial inclusion for
both merchant and consumer markets through offering affordable
financial services to previously underserved sectors of the
economy. Lesaka offers cash management solutions, growth capital,
card acquiring, bill payment technologies and value-added services
to retail merchants as well as banking, lending, and insurance
solutions to consumers across Southern Africa.
Lesaka has a primary listing on NASDAQ
(NasdaqGS: LSAK) and a secondary listing on the Johannesburg Stock
Exchange (JSE: LSK). Visit www.lesakatech.com for additional
information about Lesaka Technologies (Lesaka ™).
About Adumo
(www.adumo.com)
Adumo is South Africa’s largest independent
payments processor with over 20 years’ experience in payment
solutions, established to galvanize growth for South Africa’s
fragile small, medium and micro enterprises (“SMME’s”). Adumo
provides clients with a financial services platform that enables an
ecosystem of integrated value-added financial and business
services. The offering will assist SMME’s in getting paid,
growing, and optimizing their businesses, driving significant value
across all merchant categories.
Forward-Looking Statements
This press release contains certain statements
that may be considered forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended,
and Section 21E of the Securities Exchange Act of 1934, as amended,
and such statements are subject to the safe harbor created by those
sections and the Private Securities Litigation Reform Act of 1995,
as amended. Such statements may be identified by their use of terms
or phrases such as “expects,” “estimates,” “projects,” “believes,”
“anticipates,” “plans,” “could,” “would,” “may,” “will,” “intends,”
“outlook,” “focus,” “seek,” “potential,” “mission,” “continue,”
“goal,” “target,” “objective,” derivations thereof, and similar
terms and phrases. Forward-looking statements are based upon the
current beliefs and expectations of our management and are
inherently subject to risks and uncertainties, some of which cannot
be predicted or quantified, which could cause future events and
actual results to differ materially from those set forth in,
contemplated by, or underlying the forward-looking statements. In
this press release, statements relating to future financial results
and future financing and business opportunities are forward-looking
statements. Additional information concerning factors that could
cause actual events or results to differ materially from those in
any forward-looking statement is contained in our Form 10-K for the
fiscal year ended June 30, 2023, as filed with the SEC, as well as
other documents we have filed or will file with the SEC. With
respect to our proposed acquisition of Adumo, additional factors
that could cause actual results to differ materially from those
indicated or implied by the forward-looking statements include,
among others: (1) the occurrence of any event, change or other
circumstances that could give rise to the termination of the sale
and purchase agreement relating to the proposed acquisition; (2)
the ability to satisfy all conditions to completion of the proposed
acquisition, including obtaining regulatory and shareholder
approvals; (3) unexpected costs, charges or expenses resulting from
the transaction; (4) the disruption of management’s attention from
our ongoing business operations due to the proposed acquisition;
(5) changes in the financial condition of the markets that Adumo
serves; (6) risks associated with Adumo’s product and service
offerings or its results of operation, lower than expected growth
in Adumo’s transactions processed; (7) the challenges, risks and
costs involved with integrating the operations of Adumo with ours;
and (8) our ability to realize the anticipated benefits of the
proposed acquisition. We assume no obligation to update the
information in this press release, to revise any forward-looking
statements or to update the reasons actual results could differ
materially from those anticipated in forward-looking
statements.
Additional Information and Where to Find
It; Participants in the Solicitation
In connection with the proposed acquisition, the
Company intends to file relevant materials with the United States
Securities and Exchange Commission (the “SEC”), including a proxy
statement on Schedule 14A. Following the filing of the definitive
proxy statement with the SEC, the Company will mail the definitive
proxy statement and a proxy card to each stockholder entitled to
vote at the special meeting relating to the proposed acquisition.
The proxy statement, any other relevant documents, and all other
materials filed with the SEC concerning the Company are (or, when
filed, will be) available free of charge at the SEC’s website
at www.sec.gov and at the Investor Relations page on the
Company’s corporate website at www.lesakatech.com.
Stockholders should read carefully the proxy statement and
any other relevant documents that the Company files with the SEC
when they become available before making any voting decision
because they will contain important information about the
acquisition.
The Company and its directors and executive
officers may be deemed to be participants in the solicitation of
proxies from the stockholders of the Company in connection with the
proposed acquisition. Information regarding the interests of these
directors and executive officers in the transaction will be
included in the proxy statement described above. Additional
information regarding the directors and executive officers of the
Company is included in the Company’s proxy statement for its 2023
Annual Meeting, which was filed with the SEC on September 29, 2023,
and is supplemented by other public filings made, and to be made,
with the SEC by the Company. These documents are available free of
charge at the SEC’s website at www.sec.gov and at the
Investor Relations page on the Company’s corporate website
at www.lesakatech.com.
Investor Relations and Media Relations
Contacts:
Investor Relations Contact:Phillipe
WelthagenEmail: phillipe.welthagen@lesakatech.comMobile: +27 84 512
5393
Media Relations Contact:Janine Bester
Gertzen
Email: Janine@thenielsennetwork.com
FNK IR:Rob Fink / Matt Chesler, CFAEmail:
lsak@fnkir.com
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