Theme Park Ticketing Technology Provider Access Technology Group Just executed one of the smartest acquisitions of the year by an AIM-listed small-cap company?
The deal in question concerns the $38.5m (£30.1m) acquisition of VGS by Accesso, a similar type of company that nonetheless brings a lot to the table.
Before we go any further, you might be wondering what a “theme park ticketing technology” provider does. Maybe a bit complicated, but the concept is quite simple.
Thorpe Park is one of the theme parks that Accesso provides services to
Accesso’s technology stack drives ticket sales at theme parks, ski resorts, music venues, festivals and almost any other ticketed event, while enhancing the guest experience.
In the past (the company was incorporated in 2000 under the name Lo-Q before changing its name to accesso in 2013), this queuing technology required users to carry a pager-like device called a Q-bot with them.
Today, customers simply use their smartphones to pre-book a ride, concert or theme park exhibit and avoid long and boring lines.
Revenue is generated by taking a portion of ticket sales and licensing the group’s technology to third parties.
After bouncing back from the dark period of the Covid era, accesso enjoyed a record fiscal year in 2022 with revenue of $145m (£114m), generating around $26m in underlying profit.
This cash-generating year (even with a $2.5 million turnaround hit) set the stage for accesso’s takeover of prominent rival VGS for $52.6 million in consideration.
A tactical move in more ways than one. Not only did it significantly expand the target market for accesso in countries like Japan, Singapore, China, Dubai and Egypt, but it also brought one of the world’s largest entertainment brands under the umbrella of accesso.
Precisely which brand is a secret for now, though perhaps not a closely guarded one.
‘(VGS) has as its client the number one theme park destination in the world, located in Orlando. You can do the math on who it could be,” Accesso CEO Steve Brown said.
Here’s hoping this mysterious destination doesn’t have a mouse problem.
Whoever it is, the client adds to an already notable portfolio that includes Merlin, Six Flags, owner of all the great British destinations including Thorpe Park, and Village Roadshow, owner of the popular Movie World theme park in Australia.
The VGS integration also adds one of the seven wonders of the world to the client list: the Great Pyramid of Giza in Egypt.
Brown said he was “beyond excited to announce the ‘transformational acquisition of VGS, a business I have long admired and respected’, calling the group ‘arguably the most robust and feature-rich platform for this type of business anywhere. the market’.
Regarding the acquiree, VGS CEO Paolo Moro said he was “delighted” to join forces with accesso, noting that “our technology is complementary to accesso’s offering.”
VGS’ ticketing and visitor management technology platform has now been rebranded as accesso Horizons.
According to accesso, VGS has been consistently profitable with pro forma earnings of approximately $4 million in 2022 and would make an immediate contribution to earnings.
So, a profitable former competitor company that comes with massive theme park clients, ancient wonders, and global reach, was bought at a 10x multiple of historical underlying earnings.
Sounds like a good buy, right?
One broker saw EBITDA up 10 per cent for access for fiscal 2024, with earnings per share improving from 25.6 pence to 37 pence.
“We see this as an exciting acquisition for the Group, complementing its existing growth strategy and providing medium to long-term opportunities in a highly respected global client list,” the broker said.
At its current valuation, accesso has a share price of 772 pence with a market capitalization of £320 million.
The VGS takeover seems to have flown a bit under the radar, with accesso’s share price rising just 2 per cent since the announcement on Tuesday June 20 (although it briefly rose to 822p immediately after the press release).
Investors should have time to reflect on the latest access acquisition. Brown said his group no longer has purchases for next year.
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