PayPal to Acquire TIO Networks
Expands PayPal's Reach Into the U.S. Bill Payment Channel with More
Than 10,000 Supported Billers, 65,000 Over-the-Counter Locations and 900
Supports PayPal's Mission to Advance Financial Inclusion and
Addresses a Key Need of Underserved Consumers
SAN JOSE, Calif. & VANCOUVER, British Columbia--(BUSINESS WIRE)--
PayPal Holdings, Inc. (Nasdaq: PYPL) and TIO Networks Corp. (TSXV: TNC),
a cloud-based multi-channel bill payment processing and receivables
management company, today announced a definitive agreement under which
PayPal will acquire TIO for $3.35 CAD ($2.56 USD) per share in cash or
an approximate $304 million CAD ($233 million USD) equity value. The
purchase price represents a premium of 25.2% to TIO's 90-trading day
volume-weighted average price as of February 13, 2017, and 22.6% to the
20-trading day volume-weighted average price as of January 9, 2017, the
trading day immediately preceding the date TIO entered into exclusive
negotiations with PayPal.
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TIO is a leading multi-channel bill payment processor in North America
and processed more than $7 billion USD in consumer bill payments in
fiscal 2016. TIO serves 14 million consumer bill pay accounts* and
offers convenient solutions for expedited bill payment services to
financially underserved consumers. The company has more than 10,000
supported billers and numerous direct relationships with billers, which
enable TIO to quickly process telecom, wireless, cable and utility bill
payments for TIO's customers. Using TIO's approximately 900 operated
self-service kiosks, approximately 65,000 retail walk-in locations, and
mobile and web solutions, customers can conveniently pay their bills
while avoiding the service interruptions and financial penalties
associated with missed payment deadlines.
Dan Schulman, President and CEO of PayPal, said, "By acquiring TIO and
integrating bill payment into our global payments platform, PayPal adds
another key service in our efforts to become a part of a consumer's
everyday financial life. Worldwide, more than 2 billion** people do not
have affordable access to basic financial services, making it difficult
and expensive for consumers to carry out basic financial tasks,
including bill payment. TIO's digital platform, and physical network of
agent locations make paying bills simpler, faster, and more affordable.
We are excited by the opportunity to extend this valuable service to our
existing customers and welcome new billers and customers to PayPal."
Hamed Shahbazi, Chairman and CEO of TIO, remarked, "We founded TIO to
make speed and access part of the bill payment experience for the
underserved, and we believe that we have created affordable products to
serve the needs of all customers. Our mission fits perfectly with
PayPal's vision to democratize money. As part of the PayPal team, we
believe we will accelerate our growth through expanded distribution and
continue increasing access to more billers and services."
Expected Strategic Benefits of the TIO Acquisition
Aligned with PayPal's Vision: TIO supports PayPal's vision of
democratizing money by giving consumers more convenient and affordable
ways to pay their bills.
Expands Market Opportunity: TIO accelerates PayPal's entry into
bill payments with 14 million consumer bill pay accounts*,
approximately 60 million transactions processed in TIO's fiscal 2016
and a processing network that includes more than 10,000 billers.
Extends Consumer Value Proposition: PayPal's intention is to
offer TIO's valuable service to PayPal's customers within its online
and mobile experiences.
Upon closing of the acquisition, TIO will operate as a service within
Financial Highlights of Acquisition
PayPal intends to fund the transaction with cash on its balance sheet.
There will be no change to PayPal's previously communicated fiscal 2017
guidance and three-year outlook based on the acquisition of TIO. For the
fiscal year ended July 31, 2016, TIO generated $74.7 million CAD in
revenue ($57.1 million USD) and $10.6 million CAD in adjusted EBITDA
($8.1 million USD). TIO defines EBITDA as earnings before interest, tax,
depreciation and amortization and adjusted EBITDA as EBITDA plus
stock-based compensation, non-recurring transaction and restructuring
The acquisition is expected to close in the second half of 2017, and
will be completed by way of a plan of arrangement under the Business
Corporations Act (British Columbia).
The completion of the transaction will be subject to the approval of at
least two-thirds of the votes cast at a special meeting of TIO
shareholders and optionholders present in person or represented by proxy
at the meeting, by: (i) TIO shareholders; (ii) by TIO shareholders and
optionholders, voting together as a single class; and (iii) a majority
of the votes cast by TIO shareholders present in person or represented
by proxy at the meeting, excluding for this purpose votes attached to
the TIO common shares held by persons described in items (a) through (d)
of Section 8.1(2) of Multilateral Instrument 61-101 - Take-Over Bids
and Special Transactions.
The meeting of shareholders and optionholders is expected to take place
in April, 2017. In addition to TIO securityholder approvals, the
transaction is also subject to other closing conditions, including the
receipt of approvals relating to TIO's money transmitter licenses, the
expiration or early termination of the applicable pre-merger waiting
period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
and court approval in British Columbia, Canada.
The transaction has been approved by the boards of directors of each of
TIO and PayPal, and the TIO Board recommends that TIO shareholders and
optionholders vote in favor of the Arrangement. The recommendation of
the TIO Board was based on the recommendation of a special committee of
independent directors of TIO. The financial advisor to TIO, Raymond
James Ltd., has provided a fairness opinion to the special committee and
board of directors of TIO that, subject to the assumptions, limitations
and qualifications set out in such fairness opinion, the consideration
to be received by TIO shareholders pursuant to the plan of arrangement
is fair, from a financial point of view, to the TIO shareholders.
In addition, TIO shareholders, directors and officers, including funds
managed by Core Innovation Capital, Napier Park Financial Partners,
Edison Partners, Inter-Atlantic Advisors and Inductive Capital,
representing approximately 50.4% of the issued and outstanding common
shares have agreed to vote their shares in favor of the transaction. The
transaction includes customary deal protection provisions, including
non-solicitation of an alternative transaction and a termination fee
payable to PayPal under certain circumstances.
Further information regarding the transaction will be contained in the
management information circular which is expected to be mailed to TIO
shareholders in March in connection with the special meeting of TIO
shareholders to be held to consider the transaction. Copies of the
definitive agreement and the management information circular will also
be available under TIO's SEDAR profile at www.sedar.com.
In addition, free copies of the documents may be obtained from TIO's
investor relations website at http://corporate.tionetworks.com/
or by contacting TIO investor relations at email@example.com.
All TIO shareholders are urged to read the management information
circular as it will contain additional important information concerning
Perella Weinberg Partners LP is acting as financial adviser to PayPal,
and Sidley Austin LLP and Blake, Cassells & Graydon LLP are acting as
legal advisers on the transaction. Raymond James Ltd. is acting as
financial adviser to TIO, and Davies Ward Phillips & Vineberg LLP, and
Fasken Martineau DuMoulin LLP and Morrison & Foerster LLP, are acting as
legal advisers for the TIO Special Committee and TIO, respectively.
$1 CAD = $0.764 USD
* Consumer bill pay accounts represent the total number of accounts
between consumers and billers. A consumer may have a relationship with
more than one biller and may have more than one account.
** Source: World Bank Global Findex 2014.
Fueled by a fundamental belief that having access to financial services
creates opportunity, PayPal (Nasdaq: PYPL) is committed to democratizing
financial services and empowering people and businesses to join and
thrive in the global economy. Our open digital payments platform gives
PayPal's nearly 200 million active account holders the confidence to
connect and transact in new and powerful ways, whether they are online,
on a mobile device, in an app, or in person. Through a combination of
technological innovation and strategic partnerships, PayPal creates
better ways to manage and move money, and offers choice and flexibility
when sending payments, paying or getting paid. Available in more than
200 markets around the world, the PayPal platform, including Braintree,
Venmo and Xoom, enables consumers and merchants to receive money in more
than 100 currencies, withdraw funds in 56 currencies and hold balances
in their PayPal accounts in 25 currencies. For more information on
PayPal, visit https://www.paypal.com/about.
For PYPL financial information, visit https://investor.PayPal-corp.com.
About TIO Networks
TIO is a cloud-based multi-channel bill payment processing and
receivables management provider, serving the largest telecom, wireless,
cable, and utility bill issuers in North America. TIO integrates with
the back office of billing systems to accept, validate, and collect
payments via self-service kiosk, retail walk-in, mobile, and web
solutions. With approximately 60 million transactions processed in
fiscal 2016 and a processing network that serves more than 10,000
billers, TIO symbolizes fast, convenient, and secure access to expedited
bill payment services.
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Neither TSX Venture Exchange nor its Regulation Services Provider (as
that term is defined in policies of the TSX Venture Exchange) accepts
responsibility for the adequacy or accuracy of this release.
Forward Looking Statements
This announcement contains "forward-looking" statements within the
meaning of applicable securities laws. Forward-looking statements and
information relate to future events and future performance and reflect
PayPal's and TIO's expectations regarding the impact of this transaction
on PayPal's and TIO's financial and operating results and business, the
operation and management of TIO after the acquisition, the anticipated
funding for the transaction, and the timing of the closing of the
acquisition. Forward-looking statements may be identified by words such
as "seek", "believe", "plan", "estimate", "anticipate", expect",
"intend", and statements that an event or result "may", "will",
"should", "could", or "might" occur or be achieved and any other similar
Forward-looking statements involve risks and uncertainties which may
cause actual results to differ materially from the statements made.
Factors that could cause or contribute to such differences include, but
are not limited to, the timing and possible outcome of securityholder,
regulatory and court approvals in connection with the transaction, the
possibility that the transaction may not close, the reaction to the
transaction of TIO's customers and business partners, the reaction of
competitors to the transaction, the retention of TIO employees, PayPal's
plans for TIO, economic and political conditions in the global markets
in which PayPal and TIO operate, the future growth of PayPal's and TIO's
businesses and the possibility that integration following the
transaction may be more difficult than expected. More information about
these and other factors can be found in PayPal Holdings, Inc.'s most
recent Annual Report on Form 10-K, Quarterly Reports on Form 10-Q,
Current Reports on Form 8-K and other filings with the Securities and
Exchange Commission (the "SEC"), and its future filings with the SEC,
and in TIO's Management's Discussion and Analysis for the quarter ended
October 31, 2016 filed under TIO's SEDAR profile at www.sedar.com.
There are no assurances PayPal and TIO can fulfill forward-looking
statements and information. Such forward-looking statements and
information are only predictions based on current information available
to the respective management teams as of the date that such predictions
are made; actual events or results may differ materially as a result of
risks facing PayPal and TIO, some of which are beyond PayPal's and TIO's
control. Although PayPal and TIO believe that any forward-looking
statements and information contained in this press release are based on
reasonable assumptions, readers cannot be assured that actual outcomes
or results will be consistent with such statements. Accordingly, readers
should not place undue reliance on forward-looking statements and
Neither PayPal nor TIO accept any responsibility for any financial or
operational information contained in this press release relating to the
business, results of operations or financial condition of the other.
Each of PayPal and TIO expressly disclaims any obligation or undertaking
to disseminate any updates or revisions to any forward-looking
statements contained herein to reflect any change in the expectations
with regard thereto or any change in events, conditions or circumstances
on which any such statement is based.
View source version on businesswire.com: http://www.businesswire.com/news/home/20170214006370/en/
Director, Investor Relations
Senior Director, Corporate Communications
Source: PayPal Holdings, Inc.
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