Lesaka to acquire Bank Zero for combination of cash, shares

Lesaka (LSAK) announced that its wholly-owned subsidiary, Lesaka Technologies Proprietary, has entered into an agreement to acquire 100% of the issued ordinary shares of Bank Zero. The acquisition consideration will be settled through a combination of newly issued shares – such that the shareholders of Bank Zero will own approximately 12% of Lesaka’s fully diluted shares at the time of completion of the proposed transaction – and up to $5.1M in cash. All amounts translated at the closing rate of $1: ZAR 17.75 as of June 25. The proposed transaction is subject to the satisfaction of customary closing conditions as well as regulatory approvals ordinarily required of a transaction of this nature, including approval from the Prudential Authority, a division of the South African Reserve Bank, Competition Commission approval and Exchange Control approval. Post completion, and subject to regulatory approval, Lesaka could achieve more than ZAR 1B reduction in gross debt. The proposed transaction was agreed based on an assumed Lesaka share price of $4.97 and the current fully diluted share count. The transaction consideration of an approximate 12% stake in Lesaka of $56.3M, together with up to $5.1M in cash implies a transaction consideration of up to ZAR 1.09B for the acquisition of Bank Zero. If the actual share price at the time of completion exceeds the assumed share price, the amount of cash consideration would increase with a corresponding decrease in stock consideration. Lesaka expects the transaction to be accretive to its shareholders, with Bank Zero expected to be profitable in the fiscal year following completion of the transaction. Upon completion of the proposed transaction, the selling shareholders of Bank Zero – which include Michael Jordaan, Yatin Narsai and other members of the Bank Zero will collectively hold an approximate 12% stake in Lesaka. Bank Zero sellers will be subject to regulatory and contractual lockups ranging from between 18 and 36-months post-completion, depending on the seller. Following completion of the transaction, Michael Jordaan will join the Lesaka board of directors, while Yatin Narsai will continue as CEO of Bank Zero. The broader Bank Zero leadership team will remain in their current roles.