Cantaloupe Inc., a digital payments and software company, announced the completion of its acquisition of Three Square Market (32M) for $41 million. 32M is a leading provider of software and self-service kiosk-based point-of-sale and payment solutions that power the micro market industry. The acquisition delivers full-service capabilities to Cantaloupe’s presence in the high-growth micro market industry while also immediately expanding Cantaloupe’s international footprint for its full suite of products.
“The acquisition of 32M, with its expansive portfolio of micro-market technology and broad geographic footprint, immediately accelerates two of our most important strategic growth priorities,” Ravi Venkatesan, CEO of Cantaloupe, said in the announcement. “32M is already an integrated partner of our Seed Markets software platform, which will enable Cantaloupe to capture additional revenue synergies through cross-sell and upsell opportunities throughout our combined customer base. We are now well positioned as a best-in-class technology provider for the accelerating self-service commerce industry.”
Venkatesan added in the announcement, “This exciting acquisition builds upon the strong organic growth we are experiencing in our core business today. This combination will accelerate our organic top line growth while also expanding our margins, offering attractive financial returns to our investors. We believe that this combination also enhances the value and attractiveness of our company for future partners and strategic opportunities. We look forward to providing updated guidance, including the impact of our 32M acquisition, at our analyst day on December 12.”
Acquisition highlights:
- Provides a comprehensive line of self-service kiosks, smart coolers, and cloud-based software, already integrated with Cantaloupe’s Seed Markets software platform.
- Expands Cantaloupe’s micro market presence by adding nearly 3,000 locations across North America and international markets including the UK, Sweden and Romania.
- Increases direct salesforce and customer service teams in both the U.S. and U.K.
- Generates opportunities for revenue synergies through converting current 32M customers to SEED Markets software platform, as well as cross-selling 32M’s micro market technology to Cantaloupe’s existing food and beverage customers.
- Enhances Cantaloupe’s revenue growth and EBITDA margins immediately.
“Bringing 32M into Cantaloupe and gaining access to Cantaloupe’s 25,000+ customer base, from small and medium businesses to large enterprises, is an exciting opportunity for us,” Tony Danna, president of 32M, said in the announcement. “We can now better leverage Cantaloupe’s Seed platform with our existing customers, both in the US and other geographies, and expect to benefit from a combined salesforce to help our products reach more customers.”
Transaction details:
- The purchase price of $41 million was funded with 90% cash and 10% stock. The stock consideration is subject to a two-year vesting schedule.
- Cantaloupe has funded the cash portion with $25 million of debt from its existing credit facility and existing cash on hand.
- 32M is estimated to produce $19 million of revenue with EBITDA margins of 20%+ for calendar year 2022 on a standalone basis.
- Piper Sandler & Co. served as financial advisor, and King & Spalding served as legal advisor to Cantaloupe.
About Three Square Market (32M)
Three Square Market (32M) is a leader in providing micro market solutions to vending operators and provides one-stop-shopping for everything micro-market related, including self-pay and convenience. 32M was the first in the micro market industry to realize the importance of a mobile app and made a user-friendly app for operators on the go. As a leader in technology, 32M continues to lead the way in micro market innovation. 32M brought the introduction of the first kiosk for markets under 35 employees and added market advancements like RFID technology, second screen promotions, intelligent inventory management, campaigns, loyalty and rewards programs.
