Euronet to Acquire Ukranian ATMs

Euronet Ukraine LLC – the Ukrainian arm of Euronet Worldwide Inc. (EEFT - Snapshot Report) – announced an agreement to purchase 172 ATMs from UkrSibbank, the third largest bank in Ukraine. Additionally, the agreement allows the bank to participate in Euronet’s shared ATM network for 7 years.

This implies that the clients of UkrSibbank will be able to use Euronet’s ATMs under the same terms and conditions that are applicable while using UkrSibbank’s ATMs. Furthermore, the ATMs being acquired are situated in off-bank locations with high traffic, which makes these easily accessible and convenient options.

The sharing of network is expected to significantly enhance Euronet’s transaction volumes in Ukraine. Moreover, the deal will ensure 100% growth in the company’s market presence in the country. It will also expand the company’s foothold to include the five largest cities of the country apart from Kiev, where it already operates. Moreover, network sharing will bring down the operating cost of the company.

UkrSibbank is a subsidiary of BNP Paribas SA (BNPQY) – a Paris-based banking and financial services company with worldwide operations. The agreement has further cemented Euronet’s position as the fastest-growing Independent ATM Deployer with the largest geographical expansion in Europe.

Euronet has market presence in 11 other European countries such as Romania, Greece, Croatia, Poland, Germany, Czech Republic and Bulgaria. In September 2012, the company expanded its portfolio of Independent ATM Deployed (IAD) networks to Spain and Italy.

Further, Euronet acquired 116 ATMs from UkrSibbank in November last year. The company is the sole operator of shared ATM network in Ukraine. Apart from UkrSibbank, Euronet has network sharing agreements with five other banks in Ukraine.

Euronet carries a short-term Zacks #2 Rank (Buy), which blends well with our long-term ‘Outperform’ recommendation on the stock. Peers MoneyGram International Inc. (MGI - Analyst Report) and The Western Union Company (WU - Analyst Report) carry a Zacks #5 (short-term Strong Sell) and #3 (Hold) Rank, respectively.