Did theme park ticketing technology provider accesso Technology Group plc just execute one of the savviest acquisitions of the year by an AIM-listed small cap?
The deal in question pertains to accesso’s US$38.5 million acquisition of VGS, a similar type of company that nonetheless brings a lot to the table.
Before we go further, you might be wondering what a ‘theme park ticketing technology’ provider does. A bit of a mouthful perhaps, but the concept is simple enough.
accesso’s technology stack drives ticket sales at theme parks, ski resorts, music venues, festivals and just about any other ticketed event, all the while improving the guest experience.
Back in the day (the company was incorporated in 2000 under the name Lo-Q plc before renaming as accesso in 2013) this queuing technology required patrons to carry around a pager-type device called a Q-bot.
Nowadays, patrons simply use their smartphones to pre-book a theme park ride, gig or exhibition while avoiding lengthy, boring queues.
Revenues are generated by taking a cut of ticket sales and licensing the group’s technology to third parties.
Having recovered from the Covid-era dark period, accesso enjoyed a record financial year in 2022 with revenues of US$145mln (£114mln), generating around US$26mln in underlying earnings.
This cash-generative year (even with a US$2.5mln foreign exchange hit) laid the groundwork for accesso’s acquisition of prominent rival VGS for a US$52.6mln consideration.
A tactical move in more than one way. Not only did it significantly extend accesso’s addressable market in countries including Japan, Singapore, China, Dubai and Egypt, but it also brought one of the largest entertainment brands in the world under accesso’s umbrella.
Precisely which brand is a secret for now, though perhaps not a very closely guarded one.
“(VGS) has the number one theme park destination in the world as a client, located in Orlando. You can do the math on who that might be,” accesso’s chief executive Steve Brown said. Here’s hoping this mystery destination doesn’t have a mouse problem.
Whomever it might be, the client adds to an already notable portfolio including Merlin, Six Flags, owner of all the big British destinations including Thorpe Park, and Village Roadshow (ASX:VRL), owner of the popular Movie World theme park in Australia.
The integration of VGS also adds one of the seven wonders of the world to the client list- the Great Pyramid of Giza in Egypt.
VGS acquisition drives 10% upside
Brown said he was “beyond excited” to announce the “transformative acquisition of VGS, a business I have long admired and respected”, calling the group “arguably the most feature-rich and robust platform for this type of business that’s in the marketplace”.
As for the acquiree, VGS’s chief executive Paolo Moro said he was “delighted” to join forces with accesso, noting that “our technology is complementary with accesso’s offering”.
VGS’s ticketing and visitor-management technology platform will now be rebranded as accesso Horizons.
According to accesso, VGS has been consistently profitable with proforma profits of approximately US$4mln in 2022 and would make an immediate contribution to earnings.
So, a profitable, former competitor company that comes with massive theme park clients, ancient wonders and global reach, bought at a 10-times multiple of historic underlying earnings.
It sounds like a bloody good buy, right?
One broker saw a 10% EBITDA upside for accesso for the 2024 financial year, with earnings per share (EPS) upgraded from 25.6p to 37p.
“We see this as an exciting acquisition for the Group, complementing its existing growth strategy and providing medium to long-term opportunities across a well-respected global client list,” said the broker.
As for its current valuation, accesso is sitting on an 800p share price at a market capitalisation of £331mln.
The VGS acquisition appears to have gone somewhat under the radar, with accesso’s share price adding a little over 5.8% since the Tuesday June 20 announcement.
Investors should have time to mull the accesso’s latest acquisition- Brown said his group is done shopping for the year ahead.