Repay Holdings Corporation a provider of integrated payment processing solutions, has entered into a definitive agreement to acquire Kubra Data Transfer LTD. (KUBRA) for approximately $372 million. The deal will be funded by using a mix of the company’s current cash reserves and debt. KUBRA is one of the leading names in the industry when it comes to bill payment and customer communication management solutions. The company caters to major utilities and government organizations throughout North America.
The platform of this company is available to over 40% of the households in the U.S. and Canada and is currently managing the support for more than 250 clients with a recurring revenue business model. Their products consist of six main solutions that are integrated with ERP systems across various industry sectors..
The acquisition brings together two complementary businesses, combining REPAY’s payment technology and processing expertise with KUBRA’s established presence in key verticals and its strong go-to-market capabilities. Following the transaction, the combined entity is expected to process more than $130 billion in annual payment volumes, significantly increasing its scale and market reach.
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Announcement advances REPAY on our transformational journey to become a leading bill payment provider. The combination brings together highly complementary go-to-market approaches, creating robust opportunities to enhance growth, while also deepening client experiences and driving operational and financial efficiencies,” said John Morris, Co-Founder and Chief Executive Officer of REPAY.
“We are excited to enter KUBRA’s next phase by joining REPAY and creating a scaled payments platform,” said Rick Watkin, President and Chief Executive Officer of KUBRA. “REPAY will enhance value for our clients, while helping to further pursue growth opportunities in our end markets. I am thrilled about the opportunities this transaction provides for KUBRA and our team.”
Strategic Benefits and Growth Opportunities
The acquisition is expected to deliver several strategic advantages:
- KUBRA enhances REPAY’s entry into industries like utilities, government, and insurance.
- Prepared to capitalize on cross-vertical synergies, leveraging sales forces, and sharing industry knowledge, the joint company will serve more than 18 vertical markets.
- Based on a combined view, the firm should record about $548 million in sales and $178 million in adjusted EBITDA, which will strengthen its role in the payment.
- REPAY believes approximately $15 million in annual run-rate cost synergies, as well as a further $5 million in technology-related savings, would be realized during the next three years.
- It is anticipated that these efficiencies would come from platform consolidation, operational integration, and economies of scale.
- This deal is expected to create new income streams as well, resulting in a total of roughly $5 million by 2028.
- The expansion will be supported by the cross-selling of bill presentment, communications services, and payment processing solutions to the merged customer base.
- REPAY expects the deal to be significantly accretive, with projected free cash flow accretion of approximately 25% by 2028.
Transaction Structure and Financing
The acquisition will be conducted entirely in cash which is estimated to be worth $372 million, however there will be customary purchase price adjustments. REPAY has gotten a debt commitment from Truist Bank which consists of a $500 million term loan and a $100 million revolving credit facility.
After the transaction, the company anticipates its net leverage ratio going to about 4.0x, and through financial discipline and better operational performance, it is expected to be lowered to less than 3.0x within 18 months.
The purchase is a clear indication of REPAY’s growth in the longer term, putting the company in a position to providing better payment solutions, introducing other verticals and continually creating value for its clients and stakeholders.
