PayPoint is eyeing the £83 million acquisition of gifting firm Appreciate Group.

The payments company has agreed a deal with Appreciate, also listed on the London Stock Exchange, which values each share at 44 pence. That represents a premium of almost 69% to its closing price on Friday.

Shareholders in Appreciate, also listed on the London Stock Exchange, have been recommended to vote in favour of the deal. PayPoint says it already has ‘irrevocable undertakings and letters of intent’ to green-light the deal from 23% of these.

Immediately following the acquisition, should it complete, existing PayPoint shareholders will hold 95% of the enlarged business with Appreciate Group shareholders holding 5%.

“The PayPoint board believe the proposed acquisition of Appreciate Group provides a compelling opportunity to acquire a highly complementary business with well-established offerings in prepayment savings and the corporate and consumer gift card and voucher sector,” said CEO Nick Wiles.

“Appreciate Group brings a well-established technology platform, a strong customer base, a network of popular brand partners and significant headroom for growth across the UK consumer and corporate gifting markets which is valued at more than £8bn in the UK. 

“The acquisition will strengthen our digital payments offering and create an enhanced retail proposition across our partner network, including more than 28,000 convenience stores, delivering additional growth opportunities for the enlarged group.”

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The proposed acquisition would jointly target growth in three broad areas: prepayment saving through Park Christmas Savings to support customers with budgeting tools for Christmas and other events; an enlarged full-service offering for gifting, employee rewards and benefits to Appreciate Group’s corporate clients; and an extended consumer gifting network for the Love2shop brand.

“PayPoint’s board believes that Appreciate Group is an earnings enhancing acquisition that will deliver attractive returns for shareholders,” added Wiles.

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