Lightspeed POS Inc. announced Tuesday that it will spend more than US$100-million in cash and stock to buy a German point-of-sale company to expand within Europe.
Montreal-based Lightspeed, a cloud-based retail and restaurant point-of-sale (POS) service provider, was one of just two Canadian information technology companies to go public on the Toronto Stock Exchange last year. Its stock price rose more than 8.6 per cent Tuesday to close at $40.20.
Gastrofix GmbH will be its fourth acquisition since listing on the TSX last March.
Last October, it bought Australian POS software firm Kounta Holdings Pty Ltd. for US$43-million in cash and stock, plus an additional US$18-million in potential performance payouts. Kounta was Lightspeed’s biggest acquisition until it revealed Tuesday that it would offer Berlin-based Gastrofix US$61-million in cash and US$40-million in shares, at a value of US$28.16 a share. (Lightspeed shares closed Monday at $37.01, or US$28.46.)
The deal includes about US$11-million in potential future payouts tied to goals such as hitting performance targets. Gastrofix adds 8,000 client locations to Lightspeed’s existing 57,000, giving it a significant footprint in Germany.
“To call yourself a leader in Europe, you should make sure you have the largest economy in Europe under your belt," Lightspeed chief financial officer Brandon Nussey said in an interview. Gastrofix also has footprints in Austria, Norway and other European markets.
Germany has long held onto cash as a dominant form of payment, but electronic payments are growing, according to a recent report by McKinsey & Co. “We see us being part of that trend,” Lightspeed chief executive officer Dax Dasilva told The Globe and Mail.
Germany is also adopting new regulations for retailers and restaurants over point-of-sale data storage that could encourage greater cloud adoption for such services. “When that’s happened in other markets, like Belgium and France, it has tended to serve as a catalyst for driving a POS upgrade cycle,” BMO Nesbitt Burns Inc. analyst Thanos Moschopoulos said in an interview.
The now-public company’s growth strategy has been to blend organic growth with global expansion, bringing “some of the best teams in the world” into the fold, Mr. Dasilva said.
Lightspeed’s other recent acquisitions include the Swiss firm iKentoo, which deepened its foothold in France, Switzerland and South Africa, and Kounta, which opened up Australia and New Zealand for the company. While Lightspeed has show strong organic growth in its existing business, “they’re focused on expanding globally,” Mr. Moschopoulos said.
And Lightspeed still has money for more. The US$172-million it held in cash and equivalents at the end of its third quarter ended Sept. 30 has fallen by nearly US$96-million with its latest two acquisitions, but the remaining US$76-million is bolstered by a US$55-million line of credit from the Canadian Imperial Bank of Commerce. “We always have a pretty robust pipeline of opportunities we’re looking at,” Mr. Dasilva said.
Gastrofix comes with 130 employees at offices in Berlin and Hamburg. Berlin is one of the world’s fastest-growing hubs for startups; in 2018, it was Europe’s second-largest city in terms of venture-capital (VC) dollars deployed, behind London. Gastrofix’s Berlin headquarters is near Alexanderplatz, where many startups and venture-capital firms are clustered.
Your time is valuable. Have the Top Business Headlines newsletter conveniently delivered to your inbox in the morning or evening. Sign up today.