Elavon, a wholly-owned subsidiary of US Bancorp, has signed an agreement with Sage to acquire its payments processing business Sage Pay.
Under the terms of the agreement, Sage will receive a total sale consideration of approximately £232m ($300m) in cash, subject to customary debt and working capital adjustment.
Sage CEO Steve Hare said: “Our vision of becoming a great SaaS company for customers and colleagues alike means we will continue to focus on serving small and medium sized customers with subscription software solutions for Accounting & Financials and People & Payroll.
“Payments and banking services remain an integral part of Sage’s value proposition and we will deliver them through our growing network of partnerships, including Elavon.”
Sage provides technology to help small and medium businesses
Upon completion of the transaction, Sage Pay, a payment gateway services provider in the UK and Ireland, will become a payments partner for Sage.
Sage Pay reported £41m ($53m) in revenue and £15m ($19.4m) in operating profit as of 30 September 2018, and is expected to report a statutory profit on disposal of approximately £180m ($233m) on completion of the transaction.
For the transaction, Rothschild & Co served as lead financial advisor and Allen & Overy as legal advisor, along with Morgan Stanley and Citigroup Global Markets as financial and corporate broking advisors to Sage.
The transaction is expected to be completed in the second quarter of financial year 2020 subject to Elavon receiving regulatory approval from the US Federal Reserve System Board of Governors and the Central Bank of Ireland.
Elavon said that the acquisition would extend its share in the UK and Ireland markets, particularly for small and medium-sized enterprises where Sage Pay is the payments gateway provider.
Elavon Merchant Services Europe president and general manager Hannah Fitzsimons said: “We are a customer-focused company that is helping businesses succeed in a global marketplace that is changing rapidly. This acquisition brings tremendous talent and leading technology to Elavon, which can be leveraged across the European market.”
Elavon Financial Services DAC CEO Declan Lynch said: “We are thrilled to bring the talents and capabilities of Sage Pay employees to Elavon, where they will be an integral part of our company that is investing in the future.”
