ANZ Bank has launched a $100 million acquisition bid for Australian fintech firm Cashrewards. The offering is 35% less than the firm’s initial public offering (IPO) valuation last year, but the executive board of Cashrewards is set to accept the deal.
ANZ’s investment arm, 1835i presently has a 19% stake in the company of interest. But the latest bid is for the complete ownership of the firm
Cashrewards’ Board Unanimously Supports The Deal
The board had unanimously recommended that the shareholders of the firm accept the offer from ANZ if there is no better offer from elsewhere.
“The Offer represents an opportunity for Cashrewards shareholders to realize certainty in value,” the board stated.
The company’s IPO was held in early December last year, but its share price has been trading below its public float. As a result, the board members at the firm believe the share price could fall far below, which will further reduce its valuation. The directors believe the offer from ANZ is a good opportunity for the shareholders to take profits from their investment sooner than later as the market becomes increasingly inconsistent.
ANZ Is Looking To Expand Its Operations With The Acquisition
Cashrewards was launched in 2014 to provide cash backs to online shoppers. The company boasts of over a million subscribers and engaged with more than 1,700 merchants, including Liquoland, Adidas, and Apple. Members and users of the platform generally receive between 3% and 6% cash backs from the partners. ANZ Bank hopes the acquisition will enable it to expand its operations in Australia.
Shortly after the news of the acquisition bid, shares of Cashrewards on the Australian bourse rose by 16%, trading at AUD1.10 on the market.
The model works because retailers are prepared to pay a percentage of each sale for customer acquisition. This budget mostly goes towards advertising, but some are funneled into “affiliate programs” that pay websites for any sales they refer. Cashback businesses leverage these programs, and affiliate fees are then shared with members.
This year alone, Cachrewards’ members have already completed 3.5 million transactions worth more than $1 billion. Most of the company’s revenue goes to its members. In FY21, the company only had 17% of the profit while its members shared the remaining amount. This brought down its gross profit by 32% to $4 million.