Roper Technologies, a prominent player in the financial solutions sector, has announced its acquisition of Transact Campus, a leading provider in the payments and commerce industry. This strategic move is poised to integrate Transact's systems into Roper's existing suite of offerings which cater to senior living, educational establishments, businesses, and healthcare facilities, marking a significant expansion for the company. The net purchase price of the acquisition is pegged at $1.5 billion.
This figure conveniently includes a $100 million tax benefit, reflecting Roper's foresight in navigating fiscal advantages in such large transactions. On the other hand, Transact Campus, through a separate statement, highlights the deal's value to be at $1.6 billion, showcasing a slight variability that can often occur in merger negotiations.
The selling party, Transact, is owned by Reverence Capital Partners, positioning them in a pivotal role in the deal's execution. In response to this announcement, Roper's shares experienced an increase of 2.7% during Thursday trading hours, positioning the company for a notable third consecutive day of gains.
This uptick in share price speaks to the market's optimistic reception of the acquisition and its anticipated benefits. Neil Hunn, Roper's Chief Executive, expressed his enthusiasm for this transaction, stating, 'Transact is an excellent business that meets all of our acquisition criteria, including mission-critical solutions, strong customer retention, and excellent cash conversion.' These remarks emphasize the strategic alignment Roper seeks in its acquisitions, focusing on companies with robust operational capabilities and a loyal customer base. Transact Campus boasts a healthy user base of more than 12 million individuals, providing critical services such as campus identification systems and tuition payment solutions.
With the acquisition, Roper expects Transact to significantly contribute to the bottom line, projecting an addition of $325 million in revenue next year. Furthermore, it anticipates an earnings before interest, tax, depreciation, and amortization (EBITDA) figure to reach $105 million, positioning it as a lucrative component of Roper’s wider operations. The company's statement underscores their expectations for Transact to deliver long-term, high single-digit organic revenue growth.
This is a promising outlook, especially when combined with Roper's recent second-quarter performance, which reported a 4% increase in organic revenue year-over-year. Neil Hunn previously noted that the company is in possession of a 'robust pipeline of attractive acquisition opportunities,' signifying potential growth avenues moving forward. The leadership structure post-acquisition will see Transact's CEO, Nancy Langer, take on the role of head of Roper's CBORD brand, which will incorporate Transact following the completion of this strategic acquisition.
Dan Park, currently the CEO of CBORD, will transition into the position of Chief Operating Officer, ensuring continuity in operations during this pivotal change. To finance this purchase, Roper plans to utilize its available cash and revolving credit facility, indicating a responsible approach to capital management.
The company has indicated that the deal is expected to close 'in the immediate future,' which underscores Roper's commitment to swiftly executing this transformative acquisition and capitalizing on the advantages it presents. In financial terms, Roper appears well-positioned, with a current price of $540.95, reflecting a change of +12.95, or a total percent change of +2.45.
This demonstrates a solid investor confidence in Roper's strategic direction as it navigates this significant acquisition..