Over the past four years, Euronet Worldwide
Founded in the late 1980s, Ria is now the third-largest money transfer business worldwide, with about a 2% market share (or about $4.5 billion in money transfer annually). Of course, the No. 1 player is Western Union
Interestingly enough, the large players in this market make up less than 25% of the overall market. In other words, there's likely to be much more consolidation in the industry, as large players try to get economies of scale and penetrate new markets. Also, with more regulatory scrutiny -- such as for suspect transfers for terrorism -- the large players have more resources to implement compliance measures.
As for Ria, its network includes more than 10,000 agents, with coverage in 13 countries in North America, Europe, Asia, and the Caribbean. Besides money orders, the company also provides services like check cashing and prepaid debit cards.
No doubt, Ria's business has been growing nicely. Since 2003, revenues have averaged about 20% growth per year and EBITDA (earnings before interest, taxes, depreciation and amortization) has averaged about 38%.
But it's the synergies that have the most promise, since Euronet can leverage its enormous retail footprint with money transfer services. In fact, by 2008, the company expects an increase in earnings per share (EPS) of about $0.20 to $0.25. That's significant, as Euronet's current EPS is $1.10. In other words, so long as the company can execute on integration, there is certainly several years of solid growth. And, as indicated on the conference call, do not be surprised if Euronet makes several other deals in the space.For further reading:
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