Cardtronics Accepts NCR’s Offer

January’s edition of Cash & Payment News™ covered NCR’s bid for Cardtronics. NCR – which describes itself as ‘a technology provider for the financial, retail and hospitality industries’ – has now announced that it has entered into a definitive acquisition agreement to buy the company, paying $39 per share, valuing Cardtronics at $2.5 billion. NCR justifies this in its statement as accelerating its shift to ‘NCR-as-a-Service’ strategy, moving its mix of revenues across its business more to software, services and recurring revenue.

The transaction is expected to close in mid-2021, subject to receipt of regulatory approvals and satisfaction of customary closing conditions, including approval by Cardtronics' shareholders. On completion of the transaction, Cardtronics will become a privately held company.

Some industry analysts have commented that this is about the transformation of the physical banking branch, the move to do more automated banking via ATMs. It anticipates a move to smaller, lower cost branches that have fewer staff and a smaller footprint.

Out of the three parts of NCR’s business (banking, retail, and hospitality), the banking segment represents more than half. In 2019 the ATM business grew revenue 29%, and this acquisition should help it exploit the move to fewer branches.

Cardtronics is, though, more than just a hardware ATM business; it has customer-facing digital banking, digital connected services, software solutions, ATM management systems and software, and payment processing.

Cardtronics owns a debit network within its business called Allpoint. NCR also owns a small merchant acquirer, which it bought in 2019, called JetPay. Although a debit network does not really overlap with NCR’s current business, it complements JetPay. NCR says they will work together connecting retail and banking customers. It should also allow more recurring revenue.

In this context, the business logic clearly satisfies the management of NCR to pay $39 per share.

NCR invests further in its NCR-as-a-service strategy

NCR has also acquired Terafina to enhance its Digital First platform. Terafina produces solutions to allow bank customers to open new accounts and transfer accounts digitally, in branch or on the phone. This fits with NCR’s strategy of providing software and technology to allow customer ‘self-directed banking’ with financial institutions, part of its afore-mentioned ‘NCR-as-a-service’ strategy.