The EML Payments Ltd (ASX: EML) share price has returned from its trading halt and stormed higher on Wednesday.
The payments company's shares were up as much as 17.5% to $4.50 at one stage. They have since dropped back and are now 5% higher.
Why is the EML Payments share price on fire?
Investors were fighting to get hold of EML Payments shares following the announcement of a major acquisition on Monday.
EML Payments has entered into a binding agreement to acquire Prepaid Financial Services (PFS) for an upfront enterprise value of £226 million ($423 million) plus an earn-out component of up to £55 million ($103 million).
PFS is an award-winning European provider of white label payments and banking-as-a-service technology.
Its addition will see EML Payments become one of the largest fintech enablers in digital banking and prepaid globally. It expects this to lead to the processing of ~A$18 billion of gross debit volume (GDV) in FY 2020.
Management expects the acquisition to be mid-teen EPSA accretive in FY 2020 on a pro forma basis, before synergies. It then estimates it to be in excess of 25% EPSA accretive this financial year on a pro forma basis post approximately $6 million of net run-rate synergies.
Equity raising.
In order to fund the acquisition the company is undertaking a fully underwritten entitlement offer and placement to raise ~$250 million.
This morning the company revealed that it has successfully completed the institutional component of its entitlement offer and its placement. This has raised approximately $156 million at a price of $3.55 per share.
EML Payments will now push on with the retail entitlement offer to raise a further $91 million.
The company's CEO, Tom Cregan, was very pleased with the strong support the equity raising received.
He said: "We are pleased to see the strong support that investors have shown for the acquisition of PFS and the institutional component of the Equity Raising. The acquisition is a transformational step for EML, expanding and diversifying our customer base, product suite and geographic footprint. The Placement received strong demand from a broad range of high quality institutional investors. The Institutional Entitlement Offer was also well supported by existing institutional shareholders with a take-up rate of approximately 90% by eligible institutional shareholders."
Elsewhere in the industry, the Afterpay Touch Group Ltd (ASX: APT) share price is trading lower today. This morning it released a business update and revealed a deal with eBay Australia.
