Bango PLC (AIM:BGO, OTCQX:BGOPF) shares were up 23% after it unveiled the acquisition of the global payments business of Japan’s NTT DOCOMO for a negligible fee.
It is paying around £3.4mln for DOCOMO Digital, which was bought with a cash balance of £2.7mln.
Last year it handled around £3bn of transactions.
Liberum said the deal, which will be earnings enhancing in 2023, will almost double Bango’s end user spend (EUS).
The broker estimates that annualised cost synergies from combining its business with DOCOMO Digital will be in the order of £18mln (US$21mln) by 2023. Adjusted EBITDA will increase by more than 50% to £25.5mln (US$29.7mln) the following year, it added.
As a result, Liberum is lifting its price target for the shares to 345p (from 260p). That represents an 81% premium to Bango’s current stock market valuation.
“Importantly, with significantly more additional payment data being processed through the platform, this improves the insights through Bango Audiences,” investors were told in a note to clients.
“It also brings new merchants such as Tidal, Discovery, Paramount+, Jetstar and Shopify, enhancing its platform offering and consolidates its position as the market leader in the DCB and wallet payment markets.
“The acquisition is highly consistent with its strategy and enhances Bango’s virtuous circle.”
Mid-afternoon the shares were trading 35p higher at 191p, valuing the business at £148mln.