A business conceived at a Newport kitchen table looks set to be sold for £8.5 million after US cash machine giant Cardtronics revealed it wants to take over innovative software and marketing firm i-design.
Shareholders in the Dundee-based outfit were yesterday urged to accept a 60p per share offer, with directors saying the deal represented a “good outcome” for investors.
Stocks in AIM-listed i-design which employs around 30 people, and provides interactive advertising and associated software to operators of some 30,000 ATMs ended Tuesday priced at 23p, with a 12-month average closing price of 39.7p.
Under the terms of the prospective deal, chief executive Ana Stewart is expected to receive around £1.36m for her 16% stake, while her husband and i-design consultant Ralph Hasselgren will collect more than £900,000 in return for his 11% holding.
Cardtronics, which will make the acquisition via a newly-established special purpose vehicle, said it valued the skills, knowledge and expertise of i-design’s management and employees, and expected them to play an important role in the continuing growth of the business.
The firm would continue to be headquartered in Dundee and will also retain its London office, Cardtronics said, while staff terms and conditions would be unaffected.
The Texas-based corporation’s chief executive Steve Rathgaber said the deal made sense for his firm, which began its international expansion in 2005 and now operates a network of 61,000 cash machines in the US, UK, Mexico and Canada.
It is the world’s largest non-bank ATM operator, and is already an i-design customer.
Cardtronics reckons the purchase will allow it to diversify its revenue streams, make it more attractive to clients, and provide greater exposure to the UK market.
“At Cardtronics we gravitate to opportunities and environments where the company can draw multiple sources of revenue from a single ATM by providing additional services,” said Mr Rathgaber.
“Adding i-design and its capabilities fits that model and makes sense for our shareholders.
“Cardtronics can leverage its existing financial institution and retailer relationships to expand i-design’s global market position, which in-turn enhances the value proposition Cardtronics can offer its customers, as well as consumers using our ATMs.”
The Dundee-based firm, which recently launched its new joono software, revealed full-year revenues of £3.3m in the year to September, with pre-tax profits of £217,000.
It expects advertising markets to remain tough in the short term, but believes good long-term growth opportunities would be significantly bolstered by the increased scale and leverage offered by becoming part of Cardtronics.
Duncan of Jordanstone graduate Ms Stewart is expected to join the executive committee of the Nasdaq-listed firm, and will collect 15,000 shares in its restricted stock. Finance director Ian Sunter and Mr Hasselgren will also be granted shares in i-design’s new parent company.
Agreements have also been reached with senior employees Richard Swinfen and James Vincent, while i-design chairman James Faulds and non-executive board member Mark Hogarth will step down if shareholders give the plan the green light.
Mr Faulds, whose 7.8% stake will net him around £665,000, said the board was “pleased” to unanimously recommend the offer to shareholders.
“The offer will allow i-design shareholders to realise a significant cash premium for their shares and provide i-design with the opportunity to accelerate its growth and widen its reach in a way not currently available,” he said.
Investors in the City Quay-headquartered concern will now be sent formal confirmation of the offer, and invited to indicate their acceptance by a deadline set for early next month.
The bid requires agreement by shareholders holding more than 75% of the issued and to-be-issued stock to go ahead.
Cardtronics yesterday said it had already received irrevocable undertakings representing some 62% of the share capital including a total of 24% held by directors, as well as stakes within the portfolios held by Scottish Enterprise, stockbroker Hargreaves Hale and investment houses Sigma Capital and Rathbone Nominees Ltd.
Shares in i-design closed up 156% at 59p.