Monitise and Visa Europe (VE) have worked together since February 2011 and the new agreement announced today will extend this relationship and provide minimum revenues of €45m over the next three years. Depending on the rate of end-user adoption of m-payment and m-commerce services, there is upside potential to these revenues. As part of the agreement, Monitise is issuing warrants over 49m shares (3.2% of outstanding shares) to VE.
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Monitise and VE have signed heads of terms for a new three-year contract, covering licence rights to all aspects of Monitise’s mobile technology. The contract will be worth a minimum of €45m/£38.8m over three years and there is the potential for upside if certain user-generated thresholds are reached. Monitise and VE originally started working together in February 2011, with the Person-to-Person and Visa Alerts services launched in September 2011. In our view, the deal underpins our forecasts and demonstrates a strengthening of the relationship. There is upside potential later in the life of the contract, but this will depend on VE’s member bank customers using its primarily m-payment and m-commerce services.
As part of the contract, Monitise will issue warrants to VE: 43m at 36.25p per share, exercisable from the date the contract is signed until 4 August 2014, and a further 6m at 1p per share. If VE exercises all warrants, this would increase its stake from 7.5% to 10.3%, returning it to a similar stake to the one it had before the December fund- raising, and generating proceeds of £15.65m.
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