Subject to the approval of regulators in the US and Ireland, the deal is expected to complete early in 2020.
Sage acquired the specialist card payments processor Protex in 2006 and rebranded it as Sage Pay three years later. Since then, it built up a customer base of 50,000 organisations in the UK and Ireland.
According to Sage’s 2018 annual report, Sage Pay generated £41m in revenue and made an operating profit of £15m. The figures for the year to 30 September 2019 are not yet known, but a multiple somewhere north of 5x revenue indicates how keen Elavon was to acquire an established European payment platform to cement its position as one of the world’s top four payment providers.
The Sage Pay disposal follows a similar transaction last year when Sage’s North American payments subsidiary went to Chicago-based private equity firm GTCR for around £200m. Sage’s US payroll outsourcing arm followed it out the door in January this year.
It’s curious why Sage is so keen to get its hands on spare cash with these disposals, particularly when cloud accounting rivals Xero and QuickBooks are beefing up their payment capabilities. This week’s Xerocon, for example, saw the New Zealand-based developer roll out a whole portfolio of payment integrations with partners ranging from NatWest bank to GoCardless, CreDec and Elavon’s rival, Stripe.
Intuit, meanwhile, operates is own QuickBooks Payments service in the USA.
According to Sage CEO Steve Hare, the move is all part of the company’s tighter focus on core cloud accounting systems. “We will continue to focus on serving small and medium-sized customers, with subscription software solutions for accounting and financials, and people and payroll. Payments and banking services remain an integral part of Sage's value proposition and we will deliver them through our growing network of partnerships, including Elavon,” he said in the company’s regulatory announcement.
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