TSYS To Acquire Cayan for $1.05 Billion
Global payments solutions provider TSYS will acquire Cayan in an all-cash transaction valued at approximately $1.05 billion. Cayan, a portfolio company of Parthenon Capital Partners, provides technology led acquiring services to more than 70,000 merchants and 100+ integrated partners in the U.S., mostly through their flagship Genius platform.
Post-transaction TSYS and Cayan will serve approximately 730,000 merchant locations with annual processing volume of over $138 billion.
“The acquisition of Cayan strategically complements our merchant goals to become a leading payment solutions provider to small and medium size businesses in the U.S. by delivering ‘best in class’ services and solutions.” said M. Troy Woods, Chairman, President and Chief Executive Officer, TSYS. “TSYS already has tremendous scale and distribution capabilities. The addition of Cayan’s unified commerce solutions puts us in a strong competitive position to jointly offer a broader set of value-add products and services to our partners and merchants.”
“Cayan and TSYS are aligned in our strategy to provide cutting-edge payment solutions and a robust product offering to merchants across the U.S.,” said Henry Helgeson, Co-Founder and Chief Executive Officer, Cayan. “We’re excited about the opportunity to bring innovative products to a broader customer base.”
In a conference call, TSYS executives cited that attractive projected revenue and expense synergies – including distribution channel optimization and reduced processing costs made the deal attractive. They anticipate the leading-edge gateway significantly expands TSYS’ existing capabilities in integrated payments as well as:
• Extends sales and distribution reach through expanded partnership network in high growth verticals
• Adds material scale to TSYS’ merchant segment, advancing our goal to become the leading payment provider to small and medium sized businesses in the U.S.
• Attractive financial profile, accelerating TSYS’ growth and accretive to adjusted diluted earnings per share in 2018
The Board of Directors of TSYS has approved the transaction, which is expected to close in the first quarter of 2018, subject to regulatory approvals and other customary closing conditions.
The transaction is expected to be modestly accretive to TSYS’ net revenue growth and adjusted diluted EPS in the first full year post closing.BofA Merrill Lynch and Greenhill & Co., LLC are acting as financial advisors and Alston & Bird LLP is acting as legal advisor to TSYS. Financial Technology Partners LP is acting as financial advisor and Kirkland & Ellis LLP is acting as legal advisor to Cayan.
Jack in the Box Sells Qdoba for $305 Million
Jack in the Box Inc. entered into a definitive agreement to sell Qdoba Restaurant Corporation to certain funds managed by affiliates of Apollo Global Management, LLC for approximately $305 million in cash, subject to customary closing conditions and adjustments. The wholly owned subsidiary of Jack in the Box operates and franchises more than 700 QDOBA MEXICAN EATS® restaurants.
The transaction is expected to close by April 2018. The company expects to use the net cash proceeds after tax and transaction costs to retire outstanding debt under its term loan, as required by the terms of its credit facility.
Lenny Comma, chairman and chief executive officer of Jack in the Box Inc., said, “For the past several months, we have worked closely with our financial advisors and evaluated various strategic alternatives with respect to Qdoba, including a sale or spin-off, as well as opportunities to refranchise company restaurants. Following the completion of this robust process, our Board of Directors has determined that the sale of Qdoba is the best alternative for enhancing shareholder value and is consistent with the company’s desire to transition to a less capital-intensive business model.
“At the time the Company acquired Qdoba in 2003, it had 85 locations in 16 states, with $65 million in system-wide sales. Over the past 14 years, net units have grown at a compound annual growth rate of 16 percent. Today, Qdoba is the second largest fast-casual Mexican food brand in the U.S., with more than 700 locations in 47 states, the District of Columbia and Canada, and system-wide sales of more than $820 million in fiscal 2017. Keith Guilbault, Qdoba Brand President, has assembled a talented and experienced management team, and we wish them, the franchisees and all of the brand employees continued success.”
Apollo Senior Partner Lance Milken said, “We are extremely excited to be acquiring Qdoba and look forward to working with the management team, employees and franchisees to continue building the Qdoba brand. We are firmly committed to Qdoba’s continued growth as a leading fast-casual restaurant operator.”
Morgan Stanley & Co. LLC is serving as financial advisor and Gibson, Dunn & Crutcher LLP is serving as legal counsel to the Company in connection with this transaction. Apollo was advised by Morgan, Lewis & Bockius LLP, Paul, Weiss, Rifkind, Wharton & Garrison LLP, Deutsche Bank Securities Inc., and PJ Solomon.
The company intends to provide guidance for fiscal 2018 in connection with its presentation at the ICR Conference on January 9, 2018.
Apollo had assets under management (AUM) of approximately $242 billion as of September 30, 2017 in private equity, credit and real assets invested across a core group of nine industries.