Montréal-headquartered Plusgrade has entered an agreement to acquire Nasdaq and Toronto Stock Exchange (TSX)-listed Points for $25 USD per common share, with a total value of $385 million in an all-cash transaction.
The deal must be approved by Points’ shareholders and the Ontario Superior Court of Justice, in addition to meeting other regulatory approvals, to be finalized. Once completed, Points would become a private company under Plusgrade’s portfolio.
UPDATE 30/06/22: As of June 30, the deal has closed and Points shares are set to be delisted from the TSX and Nasdaq. Plusgrade noted that it expects the deal to generate revenue opportunities of more than $3.5 billion this year for more than 140 airline, hospitality, cruise, rail, and financial services partners across 60 countries.
Founded in 2009, Plusgrade provides an ancillary revenue platform for the global travel sector. Its platform was designed to help travel providers manage, optimize, and capture high-margin revenue generated from upgrades, unsold inventory, and other premium services.
Plusgrade claims over 80 partners in the airline, cruise, and passenger rail spaces. Through its portfolio of solutions, Plusgrade claims that it has generated more than $7 billion in new revenue opportunities for its partners. In addition to its headquarters in Montréal, Plusgrade also has offices in New York and Singapore.
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In 2018, Caisse de dépôt et placement du Québec (la Caisse) took an equity interest totalling $200 million in Plusgrade, valuing the company at over $600 million.
Ken Harris, founder and CEO of Plusgrade, said the “strong cultural fit” between both Plusgrade and Points will act as a catalyst for their future combined growth.
Points offers a loyalty commerce platform designed to “make the movement of loyalty currency simpler and more intelligent” for nearly 60 reward programs worldwide. Since its inception in 2000, Points has expanded its client base to include companies such as Citibank, Air Canada, Amtrak, WestJet, and Hilton Hotels & Resorts.
Points is set to consolidate with Plusgrade amid the post-pandemic travel boom. Statistics Canada found that the amount of Canadian residents returning from the United States in January this year was more than two and half times the amount last year.
Travel providers often depend on rewards programs to invite customers to return for more purchases, according to travel industry news site Skift. The outlet reported that Points hopes to surf the wave of a post-pandemic surge in travel to help brands earn increasing margins on transactions over time, as loyalty programs habituate consumers to repeat purchases that are less price sensitive.
As shown in its 2021 fourth quarter and full year earnings report, Points was able to surf that wave. Toward the end of last year, the company expanded its presence in the Asia-Pacific region with its partnership with EVA Air, and strengthened several existing partnerships through additional service deployments.
Points CEO and co-founder Rob MacLean described last year as one of Points’ strongest business expansion periods, adding three new loyalty program partnerships and launching 32 product and service deployments. Points claims that it exited 2021 with a products and services footprint that is 15 percent larger than when it entered the pandemic.
“Our strong fourth quarter performance sustained the year-over-year improvements we generated throughout 2021, reflecting the important role loyalty programs continue to play in the recovery of the travel and hospitality industries,” said MacLean.
Featured image from Artturi Jalli via Unsplash.