The Openpay Group Ltd (ASX: OPY) share price is on the move on Tuesday morning.
At the time of writing, the buy now pay later (BNPL) provider's shares are up 6% to $1.50.
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Why is the Openpay share price is charging higher?
Investors have been bidding the Openpay share price higher this morning after it announced a "highly material" acquisition.
According to the release, the company has entered into an agreement to acquire 100% of Payment Assist for GBP11.5 million upfront, plus an earn-out component of up to GBP17 million. This comprises GBP8.2 million cash and GBP3.3 million in Openpay scrip, payable at completion.
Payment Assist is a leading BNPL provider to the UK automotive sector. The release notes that based on their respective calendar year 2020 performances, the combined UK entity would have recorded total transaction value (TTV) of GBP121.7 million. This is almost triple the UK TTV Openpay recorded of GBP43.6 million during the year. It would also have increased its revenue in the key market from GBP2.4 million to GBP8.4 million.
In respect to the impact on its overall business, management notes that the combined pro-forma group TTV for 2020 would have been 52% higher at $416.8 million. Whereas group revenue would have lifted by 47.4% to $34.2 million.
Openpay's CEO and Managing Director, Michael Eidel, said: "In Payment Assist, we saw a unique opportunity to acquire a profitable, market-leading player in the £26.7 billion UK addressable automotive market. The proposed acquisition of this fast-growing business accelerates our automotive market entry and secures a significant foothold for Openpay in the UK. Material growth synergies exist between Openpay and Payment Assist."
"We also have shared values and a common vision to become the leading BNPS provider in our verticals, globally. We want to be a responsible provider of alternative payment and credit solutions to our customers – importantly, it's a core tenet of our strategy to embrace regulation in all of its forms. With this proposed acquisition, Openpay joins with a business that is already embracing UK Financial Conduct Authority regulation and brings a responsible approach to its customers and merchants. I look forward to welcoming Payment Assist into the Openpay family."
Payment Assist's Managing Director, Neil Jeffery, added: "By teaming up, Payment Assist and Openpay bring combined expertise and market knowledge which is unrivalled in the UK automotive industry. We are delighted to be joining with Openpay and look forward to the benefits we can bring to merchants and customers."
The Openpay share price is down 70% from its 52-week high.
