On Monday, Northland downgraded shares of BM Technologies (NYSE:BMTX) from Outperform to Market Perform and adjusted the price target to $5.40 from a previously higher figure. This rating change follows the recent announcement on Wednesday that BM Technologies has agreed to be acquired by First Carolina Bank.
The definitive agreement between BM Technologies and First Carolina Bank involves the acquisition of all outstanding BMTX common stock at $5.00 per share. This all-cash transaction is valued at an equity value of $67 million. The offer price is notably a roughly 55% premium over BM Technologies' share price as of Tuesday.
The acquisition is a significant move for First Carolina Bank, as it allows them to absorb BM Technologies' assets and customer base. For BM Technologies, the deal represents an opportunity for its shareholders to realize immediate and substantial value from their investment.
The premium offered by First Carolina Bank underscores the perceived value of BM Technologies and reflects the bank's commitment to expanding its operations and services. With the acquisition set to proceed, the new price target set by Northland reflects the terms of the deal and the expected closing share price.
The market's reaction to this acquisition will be observed as BM Technologies transitions to operating under the First Carolina Bank umbrella. Shareholders of BM Technologies are poised to receive the cash consideration upon completion of the transaction, which is expected to close following customary closing conditions and regulatory approvals.
In other recent news, BM Technologies has been making several significant strides. Northland has upgraded the company's stock from Market Perform to Outperform, indicating potential gains due to strategic alternatives and anticipated growth in adjusted EBITDA. The company's focus on its Higher Education business and decision to exit its partnership with T-Mobile are expected to contribute to an increase in adjusted EBITDA to approximately $10 million by 2025.
BM Technologies has also reported a 10% year-over-year increase in operating revenues, reaching $12.5 million for the second quarter of 2024. Despite a core EBITDA loss of $880,000 for the quarter, the company anticipates a positive core EBITDA for the full year. This optimism is backed by a successful technology platform transformation, the launch of new products and services, and strong client retention in the Higher Education sector.
In other developments, the company has launched a cash back rewards engine and an Identity Verification (IDV) solution for universities. These initiatives, along with the company's investment in AI and machine learning, are expected to enhance operations and efficiency. As these are recent developments, investors can look forward to observing how these strategies will influence the company's performance moving forward.
InvestingPro Insights
Following the announcement of BM Technologies' (NYSE:BMTX) acquisition by First Carolina Bank, InvestingPro data provides additional context to this significant development. As of the latest available data, BMTX's market capitalization stands at $57.3 million, slightly below the $67 million equity value of the acquisition deal. This difference highlights the premium First Carolina Bank is willing to pay for BMTX's assets and customer base.
InvestingPro Tips indicate that BMTX has seen a significant return over the last week, with a 45.4% price total return. This surge aligns with the announcement of the acquisition and the substantial premium offered. The stock is also trading near its 52-week high, with the current price at 97.55% of the 52-week high, reflecting the market's positive reaction to the deal.
It's worth noting that BMTX has not been profitable over the last twelve months, with a negative operating income of $10.92 million. This context adds perspective to First Carolina Bank's decision to acquire BMTX, possibly seeing potential for improved performance under new management.
For investors seeking more comprehensive analysis, InvestingPro offers 11 additional tips for BMTX, providing a deeper understanding of the company's financial position and market performance.
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