NCR Corp., a supplier of automated-teller machines and payment systems, agreed to buy Retalix Ltd. for about $650 million, gaining software and services used in supermarkets.
Retalix investors will receive $30 a share in cash, Duluth, Georgia-based NCR said today in a statement. That’s 37 percent more than Retalix’s closing price of $21.90 yesterday. Shares had risen 35 percent today on reports of the sale.
Software from Retalix, used in more than 70,000 retail locations in more than 50 countries, will help the U.S. company expand the tools it offers corporate customers in industries such as finance, travel and hospitality, NCR said. It will also provide a mix of higher-margin software and services that can help NCR diversify beyond its roots in hardware.
“It seems like a good strategic fit,” Gil Luria, an analyst at Wedbush Securities Inc., said in an interview. “It makes strategic sense, but they pay dearly for it.”
The purchase price equals 17 times Retalix’s 2013 earnings, excluding certain costs and before interest, taxes, depreciation and amortization, according to an NCR investor presentation. NCR expects the acquisition to help it reduce costs, on a pretax basis, by $5 million to $10 million in 2013.
The deal will help NCR reduce annual expenses by $20 million to $25 million over three years, the company said. While the company also expects revenue benefits, it won’t make a specific projection, NCR Chief Executive Officer Bill Nuti said on a conference call with investors. The acquisition could provide access to a market valued at $10 billion, he said.
“It’s an absolute growth plank for us,” Nuti said during the call. “This acquisition strongly supports our goal of having a $1 billion business just in software.”
NCR had declined less than 1 percent to $23.75 in New York trading before the deal was announced.
NCR agreed last year to acquire Radiant Systems Inc., a maker of customer-service sales equipment and software, for $1.2 billion, adding products for restaurants and entertainment venues.
The Retalix transaction will be financed through a combination of cash and debt, and is expected to close in the first quarter of 2013, NCR said. Retalix specializes in software and services for supermarkets, convenience stores, gas stations, pharmacies and department stores.
JPMorgan Chase & Co. advised NCR, and Jefferies & Co. gave financial guidance to Retalix.