Silicon Valley giant Paypal has acquired Vancouver-based consumer payments processing firm TIO Networks for $304 million.
Paypal will pay $3.35 in cash per share for TIO, a 25% premium over its 90-day average on the TSX, according to the Globe and Mail. The deal is expected to close in the second half of 2017.
“Shareholders did very well here,” said Hamed Shahbazi, who co-founded the firm in 1997. As an Iranian immigrant and newly minted civil engineer from the University of British Columbia, Shahbazi started Touch Technologies, an Internet kiosk provider catering to retailers and malls that would eventually become TIO.
Touch Technologies went public in 1999, with Shahbazi in charge and his father, Mohsen Shabazi, on the board of directors. Throughout the 2000s, the company expanded its internet kiosk market to include payday loan providers and convenience stores, hoping to provide self-service bill payment options to “underbanked” US consumers.
Renaming itself TIO, the company eventually upgraded to provide services through a cloud-based platform. Revenue was $8 million in 2005 and surged to $40 million in 2013. Three acquisitions have helped triple the company’s stock from its 2001-2014 base of less than $1; the same deals nearly doubled the company’s revenue compared to 2013 levels, reaching $74.7 million in its most recent fiscal year ended July 31.
TIO has also become a leading digital billing and receivables processor, handling more than seven billion in transactions last year as it widened its network to include US payday loan giant Ace Cash Express and major convenience store chain Circle K, connecting customers to 10,000 billers.
“It’s expensive to be poor and we want to bring financial services to the underserved,” said John Kunze, senior vice president of digital money transfer service Xoom, acquired by Paypal in 2015. “TIO is an amazing asset … it’s proven and very scaled. This just helps bring PayPal to a broader market.”
Shahbazi, who owns a $10-million stake in TIO, not counting stock options, will take on an executive role in Paypal. He said that he decided to sell to Paypal because of its “similar vision in terms of financial inclusion.”
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