Payfare shareholders should take the deal, Paradigm says

Another Canadian tech stock is on it way out the door, but Paradigm Capital analyst Daniel Rosenberg says the deal is a fair one for shareholders.

On December 23, Payfare (Payfare Stock Quote, Chart, News, Analysts, Financials TSX:PAY) announced it had entered into an agreement to be acquired by Fiserv, for $4.00 per share or approximately $201.5-million.

“Our board conducted a thorough strategic review process together with our financial advisers, having evaluated numerous acquisition, commercial partnership and other opportunities, and concluded that the transaction is in the best interests of the company, its various stakeholders and its shareholders with certainty of value with an all-cash offer,” CEO Marco Margiotta said. “This transaction represents tangible recognition of the value and strength of what Payfare has built as we embark on this exciting new chapter.”

Rosenberg, in a research update to clients January 6, changed his rating from “Under Review” to “Tender” and his price target from “Under Review” to $4.00. The analyst explained the reasoning behind the move.

“We initiated coverage on Payfare on September 10, 2024 and subsequently placed the company Under Review on September 27 following the announcement of the DoorDash event (Editor’s note: In September, PAY announced it would not be renewing its partnership with DoorDash, its largest customer). While the series of events were not what we had envisioned for Payfare, we believe the transaction is the best course of action for the company,” the analyst wrote. “Payfare stands to benefit from Fiserv’s larger platform and broader distribution channels, enabling the company to overcome its biggest challenge — diversifying its revenue streams. We continue to view Payfare as having a leading technology offering in EWA that remains trusted by the largest gig platforms, such as Lyft and Uber.”