News

Australia's Cashcard, in deal with First Data, may have another suitor

January 8, 2004

SYDNEY - The Cashcard Australia saga took an unexpected twist on Jan. 9 when taxi payments group Cabcharge raised the prospect of acquiring the ATM operator, although Cashcard earlier announced its sale to payments provider giant First Data Corporation.

According to a report in the Sydney Morning Herald, Cashcard has talked up the possibility of a public float for several years. Late last month the company announced on its Web site that it had signed an agreement with First Data that would see First Data buy Cashcard for an undisclosed sum "subject to regulatory approval and other customary closing conditions."

(See related stories First Data to expand ATM activities in Australia with purchase of Cashcard and Price for Australia's Cashcard said to be $148M)

Cabcharge, with a market value of around $380 million (U.S. $295.5 million), revealed it had been in "preliminary discussions" with Cashcard about an offer, the exact nature of which it has not revealed.

The statement puts a cloud over the First Data purchase, which has been valued at up to $300 million (U.S. $233.3 million). Cabcharge's shares rallied on Jan. 8 amid rumors of a deal, but fell slightly to $3.30 (U.S. $2.56) on Jan. 9.

Market sources said Cabcharge might be looking to spoil the deal or indicate its appetite for acquisitions, according to the Herald.

"There have been preliminary discussions with Cashcard Australia Limited but Cabcharge is not in a position to speculate on whether or not Cabcharge will proceed to make an offer to acquire Cashcard," executive chairman Reg Kermode said in a statement in response to market speculation.

Analysts downplayed the likelihood of Cabcharge acquiring Cashcard. One unnamed analyst noted, "It would be a big acquisition and pretty pricey, and culturally I think the businesses are very different."

But the analysts added, "I would not be surprised if the companies started working together. There are synergies in the businesses."

Cashcard had no comment on the Cabcharge rumors.

On Jan. 7, Cabcharge announced its intention to make a formal takeover offer to members of ABC Radio Taxi Co-operative in a deal estimated to be worth around $6 million (U.S. $4.6 million).