JOHANNESBURG, South Africa, Aug. 28 /PRNewswire-FirstCall/ -- Net 1 UEPS Technologies, Inc. ("Net1" or the "Company") (Nasdaq: UEPS - News) today announced that it has acquired 80.1% of BGS Smartcard Systems AG ("BGS"), an Austrian private company that provides smart card-based payment systems to banks, enterprises and government authorities in Russia, Ukraine, Uzbekistan, Mongolia, Vietnam, India and Oman. BGS' system, Dual Universal Electronic Transactions, or DUET, was developed by BGS as a derivative of the first version of Net1's UEPS technology that Net1 licensed to BGS in 1993. BGS' largest customer is Sberbank, the largest financial institution in Russia, which owns the remaining 19.9% of BGS. In the acquisition, Net1 paid the selling shareholders approximately euros 71.5 million in cash and issued certain shareholders an aggregate of 40,134 shares of Net1 common stock.Net1's management believes that the acquisition of BGS offers numerous potential strategic benefits, including the following:
-- Increasing Net1's revenues from providing its financial services and value-added products to a new cardholder base. BGS has historically employed a business model which focused on selling its product offering into various countries. In contrast, Net1's service-based business model focuses on generating continuing revenues from its cardholder base through transaction-based fees, financial services and value-added products. Management believes that the geographical footprint of BGS is now large enough to allow Net1 to overlay its service-based model onto the various DUET systems operating in Russia and other countries, thereby creating new revenue streams for BGS and system operators.
-- Enhancing Net1's product offering by leveraging technology platforms and IT development resources. Management believes that Net1's technological leadership in fields such as biometric identification and in the integration of its UEPS technology with GSM will allow Net1 to create new business opportunities for BGS such as national identification, voting and welfare distribution systems and cell phone-based payment solutions. Further, the addition of BGS' skilled human resources in the information technology area should greatly assist Net1 in the ongoing development of its technologies and maintenance of its existing systems.
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