Telstra Receives $89m Keycorp Discount

[Sydney, AUSTRALIA] Telstra has scored an AUS $89 million discount on its planned deal with Australian smart card company Keycorp, which will see Telstra merge its EFTPOS business with Keycorp’s electronic payments business.

The repricing comes one week after Keycorp was forced to downgrade its financial projections following delays in the finalization of major contracts.

Telstra will now pay AUS $426 million for a 51 percent stake in Keycorp, buying 38.7 million fully paid ordinary shares at $11.00 each. The original deal, announced in July, was for $13.30 per share, representing a value of Telstra’s EFTPOS business of approximately AUS $515 million.

Telstra said the signing of an agreement followed the completion of due diligence investigations and confirmation by the Australian Competition and Consumer Commission (ACCC) that it had no objection to the deal proceeding. The deal remains subject to approval by Keycorp shareholders at a general meeting.

The re-pricing was consistent with the recent valuation re-ratings of telecommunications and technology companies and assets globally, according to Telstra.

Keycorp’s share price slipped following the announcement, before closing below the share price the stock attracted after the original deal was announced in July.

Keycorp last week paid $110 million in scrip to acquire Adelaide-based Internet payment gateway technology developer Camtech, in a bid to push an end-to-end solution to a global market. See story.