In a bid to expand its network in Canada, Elavon – a fully-owned subsidiary of U.S. Bancorp
(USB - Analyst Report
) – has acquired Collective Point of Sale Solutions Ltd. (also known as Collective POS) in Toronto. The deal is a part of Elavon’s international growth policy in opportunistic markets. The financial terms of the deal were undisclosed.
Collective POS is a pioneer in offering customized payment processing and merchant services to entrepreneurs and owners of small and medium-sized businesses in Canada. The company caters to roughly 12,000 businesses throughout Canada and processes more than $1 billion of debit and credit card dealings on an annualized basis.
As part of the deal, President Michael Back, along with other Collective POS executives, will continue with their respective roles, following the buyout. Further, they will collaborate with Elavon to integrate 80 employees according to the needs of Elavon in Canada.
Collective POS’ recognized consumer base in Canada will help Elavon offer its diversified range of products in the Canadian market. The deal is a strategic fit for the latter since it will open up opportunities to diversify footprints, which is in tune with the company’s comprehensive growth strategy.
Management at Collective POS believes that the acquisition is beneficial as it will diversify and enhance the company’s offerings in the Canadian market.
We believe that Elavon is looking to expand its footprints in foreign shores to mitigate the adverse impact of regulatory issues in the U.S., such as the Durbin Amendment of the Dodd–Frank Wall Street Reform and Consumer Protection Act. As a result of these regulatory issues, U.S. Bancorp – Elavon’s parent company – has witnessed a decline in non-interest income in the fourth quarter of 2012, both sequentially as well as year over year. Moreover, U.S. Bancorp’s Payment Services segment, contributed $57 million of the net income in the fourth quarter of 2012, 15% lower than the third quarter of 2012.
U.S. Bancorp holds a Zacks Rank #3 (Hold). Other major regional banks that are performing well include BankUnited, Inc.
(BKU - Analyst Report
), Fifth Third Bancorp
(FITB - Analyst Report
) and Regions Financial Corp.
(RF - Analyst Report
). BankUnited carries a Zacks Rank #1 (Strong Buy) and the other two hold a Zacks Rank #2 (Buy).