Dive Brief:

• Cantaloupe, which provides software and payments processing for unattended retail operations such as kiosks and mobile ordering, agreed to be sold to 365 Retail Markets for $848 million in an all-cash deal, according to a Monday press release.
• “Cantaloupe’s and 365’s complementary strengths will enable the combined company to offer a seamless unattended retail platform for customers around the globe, from hardware to software, and payment processing technology to data analytics,” the companies said in a joint release.
• If the deal is completed, Cantaloupe will become part of a privately-held business controlled by the private equity firm Providence Equity Partners. The parties expect to close the sale in the second half of this year, after receiving shareholder and regulatory approvals.

Dive Insight:

Cantaloupe, which was founded in 1992, reported net income of about $12 million last year for the fiscal year that ended on June 30, with $268.6 million in annual revenue, according to its annual filing with the Securities and Exchange Commission. The company handled $3 billion in transactions that year, for 31,466 customers in the U.S., Australia, Mexico, the U.K., and other European countries, the filing said. 

The Malvern Pennsylvania-based company, which has about 250 employees, has sought to transform itself in the past few years, after appointing a new CEO, Ravi Venkatesan, in October 2022 to replace Sean Feeney. At the same time, Cantaloupe named a new chief technology officer, Gaurav Singal.

“Over the past four years, the company has largely transformed its business, including a corporate rebranding, refreshing its senior leadership team, narrowing its target market, improving its balance sheet, investing heavily in internal processes/infrastructure, introducing new products, and completing M&A activity,” analysts at the financial firm William Blair told clients in a note Monday.

Last year, Cantaloupe acquired Cheq Lifestyle Technology for expansion into the sports, entertainment and restaurant arena. It also acquired Three Square Market in December 2022, for growth in Mexico and Europe, as well as expansion in the U.S., according to its annual SEC filing last year.

“A rapid transformation in unattended retail is underway right now as our customers look for more sophisticated ways to grow their business,” Venkatesan said in the release announcing Cantaloupe’s sale. 

Venkatesan joined Cantaloupe in December 2020 as the company’s chief technology officer and became chief operating officer in February 2022, according to his LinkedIn profile. Prior to that, he was the head of innovation at the digital asset exchange Bakkt Holdings, which partnered with Cantaloupe in 2021 to allow the latter to accept cryptocurrencies. 

The analysts said the merger should result in opportunities for cross-selling to customers; cost-efficiencies due to scale; and more product innovation.

Providence made a majority investment in 365 Retail Markets in 2020, and the business now offers point-of-sale, payments processing and related software for self-service technology offerings to clients in the food service industry.

The William Blair analysts also raised the possibility that another buyer will compete to purchase Cantaloupe. “We believe it is possible yet unlikely a higher bid emerges,” they said in their note.

The companies entered into the agreement on Sunday and Cantaloupe’s board has approved it, though the transaction is still subject to a shareholder vote, according to a filing the company made with the Securities and Exchange Commission Monday.