Catuity acquires profitable Australian loyalty processor

Catuity acquires profitable Australian loyalty processor
Tags: Return on Investment
March 17, 2005

DETROIT, Mich. — Catuity Inc., a provider of POS-focused solutions, including loyalty and gift cards, has announced the signing of a definitive purchase agreement to acquire Loyalty Magic Pty Ltd., adding a profitable growth platform to its existing U.S. business, according to a news release. The company will acquire all the outstanding shares of Loyalty Magic for A$5.5 million (or USD $4.35 million). Of the total consideration, 35 percent will be issued in new shares and Loyalty Magic's management team and the company's sole institutional investor will hold the majority. The combined company will have a 40-person team serving existing customers in Australia, New Zealand, and North America. The transaction, which is subject to shareholder and other customary approvals, is expected to close following Catuity's Annual General Meeting in late May. Melbourne will become the operational center in Australia. Catuity's corporate headquarters remains in Detroit, Mich. "Loyalty Magic has established itself as a vital part of the customer acquisition and retention strategies of some of Australia's best known retail brands through membership programs," said John Racine, president and chief executive officer of Catuity. "They manage programs which affect 2 million consumers, nearly one in 10 Australian households. Loyalty Magic has established a strong track record as a loyalty processor offering similar services to the same types of retailers that we are focused on in the North American market." Loyalty Magic, which was founded in 1995, delivers loyalty programs to its customers by either hosting or licensing their software. Some of its customers include retailers Amcal, API, ABC Shops, Jigsaw Clothing and Jamaica Blue as well as leaders in the gaming and leisure sector: Tabcorp., Sky City Entertainment Group and Panthers Entertainment Group.