At an EGM held yesterday, Keycorp, an internet transaction solutions provider, received shareholder approval to finalise an alliance deal with Telstra, under negotiation since July.
In the equity-based deal, Keycorp will issue 38.7 million new shares to Telstra, representing approximately 51 per cent of the fully diluted capital, valued at approximately $426 million. In return, Telstra will transfer its EFTPOS payments carriage, installation and maintenance business to Keycorp.
The original announcement in July stated that the subscription price for the Keycorp shares was to be $13.30 per share, represented by a value of Telstra's EFTPOS Business of approximately $515 million.
After due diligence investigations, Keycorp's subscription price and Telstra's EFTPOS Business were revalued at a lower price. Keycorp attributed this re-pricing to the recent re-evaluations of telecommunications and technology companies and assets globally.
Brian Clayton, chairman of the EGM, said that the integration of Telstra and Keycorp will provide Keycorp with "a predictable and substantial revenue stream and strong cash flow".
"Currently, Telstra and Keycorp each provide a significant number of complementary elements in the payments value chain. Together we hope to create a strong, full service business to target the global e-payments market, which is estimated to be worth $US4.3 trillion," said Clayton.
Shareholders also approved the proposition for Keycorp to acquire 100 per cent ownership of the electronic funds transfer technology joint venture that exists between Keycorp and the Commonwealth Bank. The consideration for the acquisition is $3.6 million payable over 18 months and the issue of 220,055 Keycorp shares at $11 per share.
Courtesy The Industry Standard, http://www.thestandard.com.au