Sage Group sells payment arm to US firm Elavon for £232m

Software business Sage has sold its payments service arm for £232 million to Elavon, a subsidiary of US firm Bancorp.

The UK-listed firm told investors it had secured the deal to sell Sage Pay, three months after it announced plans to auction off the division.

It was reported in September that Sage had appointed Rothschild to sell the business, which has around 50,000 small and medium-sized business customers.

Sage Pay provides payment services to businesses in the UK and Ireland and the divested business will continue to partner with Sage following the deal, it said.

For the year to September 2018, Sage Pay reported revenues of £41 million and an operating profit of £15 million.

Sage said it expects to report a statutory profit of approximately £180 million on the completion of the disposal.

Sage chief executive Steve Hare said: “Our vision of becoming a great ‘software as a service’ company for customers and colleagues alike means we will continue to focus on serving small and medium-sized customers with subscription software solutions for accounting and financials, and people and payroll.

“Payments and banking services remain an integral part of Sage’s value proposition and we will deliver them through our growing network of partnerships, including Elavon.”

The transaction is due to be completed in the second quarter of next year.

Completion of the deal will be subject to Elavon securing regulatory approval in the US and from the Central Bank of Ireland.

Investors in Sage are awaiting the company’s full-year results on Thursday November 21.

The results follow a warning from the business in July that its profit margin would be at the lower end of forecasts as legacy product sales fell faster than predicted.