EVERTEC (NYSE:EVTC) climbs 1.3% on prelim Q2 numbers and FY outlook, will acquire Sinqia for consideration with a value of R$27.19 per share, increased by a customary daily “ticking fee” of up to R$1.00 per share depending on the timing of the closing.
Sinqia is a player in the market for software for financial services in Brazil. Based on the closing price of Sinqia shares on July 19, 2023, Sinqia has an equity valuation of R$2,326M ($485M) and an enterprise value of R$2,835M ($591M).
The transaction represents a ~24.0% premium to the unaffected share price at July 19, 2023, and a 22.6% premium to the prior 30-day volume weighted average price. Consideration will be in the form of 90% cash and 10% Evertec shares.
Evertec (EVTC) intends to finance the acquisition with cash on hand and committed financing of $600M. The transaction is expected to close in Q4 2023. The proposed transaction is expected to be breakeven to slightly accretive to 2024 adjusted EPS and accretive in 2025.
The company also provides preliminary earnings with revenue range between $166M to $167M, as compared to $160.6M in the prior year quarter, reflecting growth in all payment segments.
Adjusted EBITDA range between $73M to $74M compared with $74.1M in the prior year quarter. Adjusted EBITDA range of 44% to 45%, compared with 46.1% prior.
Diluted EPS are expected to range between $0.42 and $0.45, compared with $0.47 prior. Adjusted EPS is expected in a range of $0.70 and $0.72 vs. $0.67 prior.
FY 2023 Outlook: Consolidated revenue is anticipated to be between $652M-$658M, representing growth of 5–6%, compared with $644M-$652M previously estimated. EPS between $1.82 to $1.91 vs. $1.80 to $1.90 previously estimated, compared to $3.45 in 2022. Adjusted EPS between $2.75 to $2.83, representing ~9% to 12% growth as compared to $2.53 in 2022, as recast, compared with $2.59 to $2.68 previously estimated.
