It was just 10 months ago that fintech company Cashrewards (ASX: CRW) successfully raised $65 million at an IPO offer price of $1.73 per share. Fast forward to today and it seems there will be no reward on the horizon for shareholders with the Board unanimously recommending they accept an all-cash takeover offer at just $1.135 per share.
For those who participated in the IPO, it’s a bitter pill to swallow but they can at least take solace that the Offer comes at a 19.5% premium to CRW’s last closing price of $0.95.
The Offer comes from 1835i Group which is a venture capital firm that is partnered with ANZ Bank who will be the ultimate beneficiaries of the acquisition.
Under the terms of the deal, Cashrewards will continue operating its cashback services to Australian shoppers and merchants who can earn cashback from shopping at certain stores that are signed up to the Cashrewards platform.
As with all things eCommerce related, consumer data collection and targeted advertising is the driving force behind the platform.
This led to 331,390 new members signing up to the Cashrewards platform in FY21 to take their total members to more than 1.1 million. This consumer data will now be owned by 1835i for potential cross-promotion with other ANZ linked projects.
With the big boost in member numbers, Cashrewards’ revenue went up 29% for the Company to report $22 million in sales revenue. However, this was not enough to counter the $29.7m net loss after tax recorded, which was even worse than FY20 when Cashrewards incurred a $6.6m loss.
Notwithstanding, 1835i still sees value in the Cashrewards business and the consumer data they collect.
“The proposed transaction is an endorsement of the quality of the Cashrewards offering for members and merchants and will help further advance our position as the leader in Australian cashback,” said Cashrewards CEO, Bernard Wilson.
“We are pleased to be entering into an Implementation Deed with 1835i today and believe it is in the best interests of our shareholders. It provides an opportunity for our shareholders to realise a significant premium to the prevailing trading price of Cashrewards shares.”
As well as their large database of consumer data, Cashrewards has more than 1,700 merchant partners which include Apple, Myer, Liquorland, Adidas, Bonds, Target, Booking.com and The Iconic. This ecosystem has driven more than $2.7 billion of Total Transaction Value for merchant partners since its inception, translating into more than $120 million of cashback for members.
“We are excited to enter into an Implementation Deed with Cashrewards to support the Company during the next phase of its development,” said 1835i Managing Director, Ron Spector.
1835i already held 19.0% of CRW shares on issue.
Alfred Chan is a Business Reporter at The Sentiment specialising in ASX-listed small cap companies, a bloodstock enthusiast and former equities analyst.
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