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Sage Group to sell merchant payment service business to US Bancorp

The London-listed software giant said that Sage Pay will remain “an important payments partner” following the £232mln sale

The Sage Group plc - Sage Group to sell merchant payment service business to U.S. Bancorp
A payment gateway authorises credit card or direct payments

Sage Group PLC (LON:SGE) has agreed to sell its merchant payment service business to American bank holding firm US Bancorp (NYSE:USB) for £232mln.

The FTSE 100-listed software giant said that Sage Pay, a provider services for merchant to authorise credit card or direct payments processing in the UK and Ireland, will remain “an important payments partner” following the sale, which is expected to complete in the second quarter.

READ: Sage tops blue-chip loserboard as legacy product sales fall faster-than-expected

Following the payment, Sage expects to report £180mln statutory profit; for the year ended on 30 September, revenue was £41mln and operating profit was £15mln.

The UK software firm has in recent years been shifting its focus to subscription services by moving more products to the cloud.

“Our vision of becoming a great software as a service company for customers and colleagues alike means we will continue to focus on serving small and medium-sized customers with subscription software solutions for accounting & financials and people & payroll,” Sage’s chief executive Steve Hare said in a release.

"We expect the proceeds to be used to reduce net debt from the £448mln level reported at 31 March 2019 to below £200mln, potentially allowing headroom for enhanced shareholder returns via buybacks or dividends," analysts at Shore Capital said in a note.

Shares remained flat at 738.4p on Monday morning.

--Adds broker's comment, shares--

Quick facts: The Sage Group plc

Price: 716 GBX

LSE:SGE
Market: LSE
Market Cap: £7.82 billion
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