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Pushpay in US$87.5 million U.S. acquisition

Defensive ASX shares

Digital tithe merchant Pushpay Holdings Group Ltd (ASX: PPH) today announced it’ll spend US$87.5 million to acquire rival Church Community Builder using a mix of cash on hand and debt. According to the announcement Church Community provides digital church management systems to over 4,000 U.S. churches. 

Pushpay’s financial year ends March 31 2020 and it reports the acquisition is expected to be accretive on a pre tax operating cash flow per share basis over the year to March 31 2021. Over the year to March 31 2022 the deal is expected to add “material” accretion to Pushpay’s total revenue and EBITDAF. 

The company also reiterated the following guidance: “Operating revenue of between US$121.0 million and US$124.0 million, gross margin of over 63%, EBITDAF of between US$23.0 million and US$25.0 million, and total processing volume of between US$4.8 billion and US$5.0 billion.”

Pushpay has a shareholder basis as evangelical as the churchgoers it skims fees from, but whether this business model lasts the distance is yet to be seen. 

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Tom Richardson has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of PUSHPAY FPO NZX. The Motley Fool Australia has recommended PUSHPAY FPO NZX. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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