Francisco Partners to buy Moneris for CAD $2 billion

American private equity firm Francisco Partners has agreed to acquire Canadian payments giant Moneris from the Bank of Montreal and Royal Bank of Canada. The deal is worth an estimated CAD $2 billion in cash.

The transaction would transfer ownership of one of Canada's largest payments businesses to the technology-focused investment firm, with BMO and RBC each receiving half of the proceeds. The deal also includes long-term exclusive referral agreements with both banks.

Moneris handles payments at more than 325,000 points of commerce across Canada and says it represents one in three transactions in the country. It provides payment acceptance and commerce tools for in-store, online and mobile sales, and employs nearly 2,000 people nationwide.

The agreement remains subject to regulatory approvals and other closing conditions, including review under the Retail Payment Activities Act and clearance under Canada's Competition Act.

Ownership Shift

The deal marks a major change for Moneris, long owned by RBC and BMO. The banks are not fully severing ties with the payments provider, however, as the agreement includes exclusive customer referral arrangements designed to preserve a commercial relationship after the sale.

BMO and RBC indicated that they expect clients to continue using Moneris products and services through the referral model.

Keeping BMO and RBC as exclusive referral partners gives the business continued access to bank clients even as ownership shifts to a private investment firm.

Francisco Partners also plans to appoint Jeff Sloan as Chairman of Moneris. Sloan is the former President and CEO of Global Payments.

James Hicks, President and CEO of Moneris, described the deal as "an exciting next step" in the company's evolution.

"This announcement marks an exciting next step in Moneris' continued evolution as the company that powers Canadian commerce," said Hicks. "The deep relationships we have built with BMO and RBC extend well beyond ownership. Their decision to establish long-term referral agreements and maintain ongoing commercial relationships with Moneris reflects the confidence both organizations have in Moneris and provides a strong foundation for continuity, collaboration and long-term growth."

Investor Plans

Francisco Partners has previously invested in payments and financial technology companies including Hypercom, Paymetric, PayLease, NMI and Verifone. The Moneris acquisition would add a business with a large installed base in Canada and longstanding relationships with major domestic banks.

Peter Christodoulo, partner at Francisco Partners, said the firm sees room to build on Moneris' market position.

"Moneris is one of the strongest payments solution providers in North America, with a trusted brand, leading technology and a proven team that has helped shape the way Canadian businesses operate," said Christodoulo. "We see a significant opportunity to build on that foundation through continued investment in innovation, platform expansion and long-term growth, while preserving the deeply Canadian identity that has made Moneris a market leader, including its long-standing relationships with leading Canadian financial institutions, BMO and RBC."