DALLAS -- 7-Eleven Inc. has entered into an agreement with Cardtronics Inc. for the ATM operator to acquire the retailer's ATM operations in the United States. The agreement will provide Cardtronics with a 10-year exclusive right to operate all ATMs and Vcom advanced-function financial self-service kiosks in U.S. 7-Eleven locations, including in any new 7-Eleven stores.
The acquisition will add more than 5,500 high-volume ATMs to the Cardtronics portfolio, expanding the size of Cardtronics' network to more than 30,000 machines. The deal's price tag was $135 [image-nocss] million in cash, plus or minus a possible adjustment for working capital balances as of the closing date.
Of the more than 5,500 machines in the 7-Eleven U.S. ATM network, approximately 2,000 are Vcom terminals. Vcom units offer check cashing, bill payment and money transfer in addition to traditional cash dispensing and balance inquiry. In addition, the 2,000 Vcom machines will soon start accepting image deposits for participating financial institutions.
"Acquiring the 7-Eleven ATM portfolio is a natural extension of our strategy to partner with major retailers in high-traffic locations," said Jack Antonini, president and CEO of Cardtronics. "This acquisition will provide a significant boost to Cardtronics' transaction volume while simultaneously moving Cardtronics into a leadership position in offering advanced, non-traditional financial services via the advanced functionality kiosks."
Brian Archer, Cardtronics executive vice president, said, "The 7-Eleven footprint nicely complements our existing base of deployed machines and strengthens our presence in key geographies while further solidifying Cardtronics' position as the ATM provider of choice for national merchants, thanks to our quality of service, unmatched scale and unique bank branding and surcharge-free offerings."
As part of the agreement with 7-Eleven, Cardtronics will assume ownership or operation of all ATM and Vcom equipment currently owned or leased by 7-Eleven as well as maintenance, cash replenishment, processing, customer service, 24-hour monitoring and other operational functions for the ATMs.
Cardtronics said it hopes to close the transaction by the end of June 2007. The agreement is subject to various conditions including customary regulatory approvals. The company said it intends to finance the transaction with a combination of bank debt and other debt securities, and expects its leverage level to be moderately higher at closing as a result.
The company paid $44 million to American Express Co. three years ago for 5,483 AmEx machines in 7-Eleven corporate-owned, franchised or licensed stores, reported Digital Transactions News. AmEx bought the 7-Eleven network in 2000 from EDS Corp., it added.
A 7-Eleven spokesperson told the magazine that the company will use the money to fund store remodelings, new store openings and technology upgrades. The sale allows us to reinvest resources back into our system, she said. 7-Eleven will continue to receive some fee income from the machines, though neither company would discuss specifics, said the report.
7-Eleven in 2006 struck a surcharge-free agreement with Citigroup Inc. under which the machines were branded with Citi's logo. That arrangement will continue, the report said.
Houston-based Cardtronics operates in every major U.S. market, at more than 1,500 locations throughout the U.K. and at 500 locations in Mexico. Major merchant-clients include A&P, Albertson's, Hess, BP, Chevron, Costco, CVS, ExxonMobil, Duane Reade, Rite Aid, Sunoco, Target and Walgreens.
Dallas-based 7 Eleven operates, franchises or licenses more than 7,200 7-Eleven stores in North America. Globally, it operates, franchises or licenses more than 32,200 stores in 17 countries and U.S. territories. During 2006, 7-Eleven stores worldwide generated total sales of more than $44 billion.
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