NCR’s Acquisition Of Radiant Should Spur Growth, Analyst Says

ATM maker NCR Corp. has completed its $1.2 billion acquisition of Radiant Systems Inc. in a move management and an analyst say should cut administrative and personnel costs while spurring growth in international markets.

Atlanta-based Radiant creates point-of-sale hardware and software, mostly for restaurants.

 “This acquisition is another demonstration of NCR’s strategy to expand into high-margin adjacencies and new industry segments, and is a major milestone toward the realization of our business goals,” Bill Nuti, NCR chairman and CEO, said in an Aug. 29 press release.

The agreement “does a lot of good things,” agrees Gil B. Luria, senior vice president at Los Angeles-based Wedbush Securities LLC. In the short term, Duluth, Ga.-based NCR has purchased a good, fast-growing company, Luria tells PaymentsSource. “That in and of itself will help NCR,” he says.

Cutting overlapping costs also will bring short-term benefits, Luria notes. Management should find plenty of opportunities to make those cuts because Radiant specializes in point-of-sale businesses that complement NCR’s offerings, he says.

Another short-term benefit involves Radiant’s strong presence in the restaurant market, which accounts for two-thirds of its revenue. That should help NCR gain strength in that market, Luria says.

Longer term, NCR may use its established international connections to introduce Radiant products to new markets where they have had no presence, Luria says.

As a company that has succeeded in what had been a fragmented, slow-growing industry, Radiant can help NCR do the same in other vertical markets, Luria says.

Radiant has alluded to advantages it hopes to gain from the acquisition. “By adding Radiant’s business to NCR, we’re establishing our third core vertical and strengthening our focus and penetration in hospitality and specialty retail, becoming an immediate leader in that segment,” Nuti said during a July conference with analysts (see story).  “The acquisition would grow NCR’s market opportunity for the hospitality and retail segments by $8 billion, he added.

Before the merger, NCR amassed about 87% of Radiant’s outstanding shares, including all shares subject to guarantees of delivery in connection with its previous tender offer, the NCR release said. NCR then exercised its option to purchase additional shares, increasing its stake to more than 90% and allowing for a “short-form acquisition” under Georgia law, according to the release.

Radiant becomes a wholly owned NCR subsidiary, the release said.

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