NYSE-listed NCR Corp. is bolstering its offering with the acquisition of Nasdaq-listed Radiant Systems.
The $1.2 billion acquisition is a vertical deal for NCR, augmenting its core transaction services offerings in the financial and retail markets with Radiant's exposure to the hospitality and specialty retail categories. The transaction will be executed through a cash tender offer for Radiant valued at $28.00 a share. The deal will be financed with roughly $100 million of cash from NCR's balance sheet and $1.1 billion of debt. JPMorgan, RBC Capital Markets, BofA Merrill Lynch and Morgan Stanley have signed on as lenders for the transaction.
NCR's history traces all the way back to 1884, when the business -- then known as National Cash Register Co. -- cornered the market for mechanical cash registers. NCR, which also commercialized the first bar code scanners back in the Seventies, has since evolved to provide financial institutions and retailers with transaction-oriented technologies, such as ATMs and cash dispensers. It also provides self-service kiosks used in the retail, gaming, healthcare and entertainment industries -- such as its Blockbuster branded DVD kiosk business. Coincidentally, NCR is exploring its options for the entertainment segment, an effort company management discussed in the conference call detailing the Radiant deal.
Radiant, meanwhile, provides point-of-sale technology to the hospitality and retail sectors, offering touch-screen terminals, self-service kiosks or wireless devices. In 2010, Radiant generated $50 million of Ebitda on revenues of $346 million.
Analysts largely cheered the transaction. Wedbush Morgan, for instance, noted that beyond the new verticals introduced by the deal, NCR should also benefit by extending Radiant's software offerings to other segments. The transaction is expected to be accretive to NCR's non-GAAP earnings in 2012.
Analysts covering Radiant's stock, noted that the valuation -- a 30% premium over Radiant's shares ahead of the deal -- is fair, and unlikely to attract topping offers. A separate note from Wedbush Morgan, found on Thomson One Analytics, named rival Micros Systems as a potential suitor, but said the likelihood of such a bid "appears low."
The $1.2 billion purchase price represents a takeout value of roughly 17.5x estimated 2011 Ebitda, according to Raymond James.
Atlas Strategic Advisors, LLC, and JPMorgan Securities advised NCR on the transaction, while Radiant tapped Jefferies & Co. as its lead advisor and SunTrust Robinson Humphrey, which served in a co-advisory role. Womble, Carlyle, Sandridge & Rice served as legal counsel to NCR, while DLA Piper served in the same capacity to Radiant.