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ASX 200 falls, Tyro (ASX:TYR) up on merchant deal

ASX 200
Credit: Cimexus

The S&P/ASX 200 Index (ASX: XJO) went down by 0.5% today to 6,177 points.

Here are some of the highlights from the ASX today:

Tyro Payments Ltd (ASX: TYR)

The Tyro share price went up by 5.4% today after the payments business announced a merchant deal.

Tyro announced that it’s partnering with Bendigo and Adelaide Bank Ltd (ASX: BEN) to create a long-term merchant acquiring alliance.

As a result of the deal, Tyro expects to deploy more than 26,000 Tyro terminals in 2021 for the alliance, increasing its terminal fleet to just over 89,000 terminals.

Tyro will exclusively provide merchant acquiring services to Bendigo Bank’s existing merchant acquiring customers and Bendigo Bank will exclusively refer new merchant opportunities from its business customer base to Tyro, under a joint brand.

Economic benefits of Bendigo Bank’s existing merchant service contracts will move to Tyro on completion, which is expected in the first half of the calendar year. Tyro is buying Bendigo Bank’s merchant service contracts and associated goodwill.

Tyro will pay Bendigo Bank $9 million upfront. Bendigo Bank there will also get an on-going gross profit share from existing and newly referring Bendigo Bank business customers who use Tyro’s merchant acquiring services.

This alliance between the two ASX 200 shares has an initial 10-year term with provisions for extensions by agreement for additional five-year terms. If the alliance expires, all Bendigo Bank transferred and referred customers will remain with Tyro, with Bendigo Bank’s gross profit share to continue while those customers are served by Tyro.

Tyro said there are a few costs relating to implementing this alliance. There will be a one-off project resourcing cost of $3.8 million. There will also be other one-off project costs, including terminals, of $16.1 million. Finally, there will be ongoing additional personnel costs to support the alliance, which is expected to be around $6.7 million per annum.

The ASX 200 payments business is expecting that Bendigo Bank’s business customers will generate around $5 billion in transaction value in FY22. Tyro’s gross profit share (after the gross profit share to Bendigo Bank and before operating costs) from the Bendigo Bank cohort will be approximately $19 million in FY22.

The Bendigo Bank share price went up by 2.8% today.

Rio Tinto Ltd (ASX: RIO)

The ASX 200 mining giant announced its FY20 third quarter production results today.

Compared to the second quarter, iron ore shipments were down 5% to 82.1Mt, though production was up 4% to 86.4Mt. Bauxite production was down 1%, aluminium production was up 2%, mined copper was down 2% and production of pellets and concentrate at Iron Ore Company of Canada (IOC) was 21% lower due to an annual maintenance shutdown as well as a weather related power failure and mechanical issues also impacting production.

Rio Tinto CEO J-S Jacques said: “Rio Tinto has shown great resilience through challenging conditions and will continue to prioritise the health and safety of our employees, contractors and communities. The quality of our assets, coupled with our strong focus on capital discipline and value over volume approach, mean we can continue to invest in our business, support our communities, pay taxes and royalties to host governments and continue to generate superior returns to shareholders in the short, medium and long term.”

Aussie Broadband Pty Ltd (ASX: ABB)

Telecommunications business Aussie Broadband listed onto the ASX today. It had an amazing debut.

The Aussie Broadband share price almost doubled from its $1 listing price, finishing with a share price of $1.91.

Next Monday could be another very volatile day for the telco ASX share.

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Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Tyro Payments. The Motley Fool Australia has no position in any of the stocks mentioned. 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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