Optimal Payments and Skrill Group, two of the U.K.'s biggest digital wallet companies, are merging in a $1.2 billion deal that will create a combined company with $697 million in revenue, Reuters reported on Monday (March 23).
The deal will combine Optimal’s Neteller digital payment business with Skrill’s e-wallet service. The combined business will be able to handle more than 100 payment types in 41 currencies, and will have a strong foothold in payments for online gambling, eCommerce and digital media, the companies said in a prepared statement.
Skrill, which is one of the largest online payments and Internet money transfer companies in Europe, is one of only a few payments services that eBay allows sellers to accept for marketplace transactions. The company launched its own payments service for digital marketplaces last September.
Optimal moved into the U.S. market last summer when it acquired California-based Meritus Payment Solutions. The cash-and-stock deal will let Optimal reduce its current dependence on a few large Asian customers in the online gambling sector.
But gambling will still be a strong focus for the combined company. "The U.S. [gaming] market, in particular, is just reopening and re-evolving," Optimal CEO Joel Leonoff told Reuters. "Ultimately we're looking at states like Pennsylvania and California to come online and this certainly establishes us as a very relevant supplier to the industry." New Jersey, Nevada and Delaware have already approved Internet gambling.
Under the deal, Optimal will buy Skrill from a holding company owned by private equity firm CVC Capital, Investcorp Technology Partners and other shareholders for €720 million ($790 million) in cash and 37.5 million new shares (worth $148 million), along with taking on $280 million in Skrill net debt. Skrill investors will have a 7.9 percent stake in the combined company.
The deal is subject to approval by Optimal’s shareholders and regulators and is expected to close by Q3 of 2015, the companies said.