OFX Group shares opened the week strongly after it said it would acquire Canadian-based Firma Foreign Exchange Corporation for almost $100 million.
Based in Edmonton, Canada and founded in 1998, Firma is a global foreign exchange service provider servicing corporate clients. The firm has almost 200 employees and 10k corporate customers and operates in offices in Canada, Australia, the UK, and New Zealand.
Firma’s key products include spot and market orders, multi-currency accounts, payments and mass payments and forward contracts. OFX said that Firma has a strong commercial expertise and will significantly add to its volumes in major currency pairs such as USD/CAD and USD/GBP, diversifying its currency flows as well as the industries its Corporate segment currently serves.
The acquisition delivers incremental revenue to OFX’s Corporate segment of 93% and to its North America region of 121%, representing more than five years of organic growth. With combined group revenue of $186.5 million and EBITDA of $55.1 million for the last twelve months, OFX will be a major specialist Corporate cross border payments provider in Canada.
The $98 million consideration funded by an underwritten debt facility and existing cash, represents 9x Firma’s EBITDA for the last twelve months, with the Acquisition expected to generate underlying EPS accretion of more than 20% in the first year one and more than 30% in year two following completion. In addition, OFX expects to deliver at least $5 million of pre-tax cost and revenue synergies in FY25 through leveraging its global technology platform, larger footprint of licenses, enhanced product offering, and from benefits of scale such as lower banking fees.
OFX Chief Executive Officer and Managing Director, Skander Malcolm said: “This is our first major acquisition and very much aligned with our strategy of building scale in the Corporate segment and growing the North American region. Firma generates strong earnings from a high-quality customer base and has an excellent service culture, so there is a lot of alignment with OFX. By bringing our businesses together we become a much bigger Corporate specialist with a strong recurring revenue base and considerable growth opportunities.”