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Why Net 1 UEPS Shares Jumped

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Net 1 UEPS (Nasdaq: UEPS  ) jumped today by as much as 15% after a favorable court ruling.

So what: In January, the company was awarded a lucrative contract by the South African Social Security Agency, or SASSA, to provide payment services for government social grants for five years. A month later, the contract was disputed by two local companies that lost during the bidding process, AllPay and Empilweni.

Now what: AllPay and Empilweni had said the award "threatens to completely destroy" its business. Net 1's announcement today was that the North Gauteng High Court ruled that the SASSA contract was valid and won't be set aside. The contract will involve enrolling millions of grant recipients and issuing smart cards with biometric tools.

Interested in more info on Net 1 UEPS? Add it to your watchlist by clicking here.

Fool contributor Evan Niu holds no position in any company mentioned. Click here to see his holdings and a short bio. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.

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  • Report this Comment On August 29, 2012, at 2:44 AM, TMFTheSnake wrote:

    In actuality, the tender process was ruled illegal and invalid, but the contract won't be set aside for reasons of practicality - the judge thought it would disrupt the distribution of welfare benefits too much to force a changeover.

    A little concerned about Net 1's representation, though the end result is the same - at least until AllPay's lawyers decide whether to pursue the issue further.

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