Sold for £70m: Tech pioneer sunk by Apple
A FORMER darling of Britain’s tech scene is being snapped up by American buyers after losing a battle with Apple and Google.
Monitise pioneered mobile phone payments and was once a £2bn business which many expected to dominate the industry.
But its value collapsed after giants Apple and Google muscled in with rival software backed by all the wealth Silicon Valley could muster.
Shares in the Soho-based firm have crashed 98pc since their peak in early 2014, and the business is now being bought by Fiserv for just £70m.
‘the tech sector is a particularly savage place to be because it moves so fast,’ said Hargreaves Lansdown analyst Laith Khalaf.
‘the likes of Apple, Google’s parent company Alphabet and Facebook are so big they can afford to throw resources at designing their own stuff and buying competitors.
‘If they decide to enter the market then competitors should beware because they have such deep pockets – Monitise might have been a £2bn company but Google and Apple can draw on hundreds of billions.’
Founded in 2003, Monitise floated four years later and quickly became the toast of the City, winning backing from big hitters such as Visa, MasterCard and telefonica.
the firm developed a star-studded list of clients, with payment systems for Santander and most other UK banks, and tie-ups with well-known names including Premier Inn. But envious eyes were watching from across the Atlantic – and in 2013, Apple began top- secret talks with Visa, MasterCard and US lenders about its own service.
the proposals were deemed so sensitive that one firm involved, Wall Street giant JP Morgan, held all discussions in a windowless ‘war room’ to prevent details from leaking out. Of the 300 people who the bank set to work on the project, only 100 were told that Apple was the partner.
the iPhone maker finally announced its plans to enter the market with Apple Pay on September 9, 2014. Nine days later, Visa said it was looking to reduce its stake in Monitise – sending shares crashing around 35pc.
Google launched its Android Pay system the same year, hammering another nail into the company’s coffin. Meanwhile, losses were stacking up and bosses were jumping ship. Monitise issued three profit warnings in 12 months, co-founder Alastair Lukies – a former professional rugby player – quit, and his replacement Elizabeth Buse departed soon afterwards, quickly followed by chief finance officer Brad Petzer. Since midway through 2015, it has lost £528m. the firm put itself up for sale two years ago.
Chief executive Lee Cameron, who earned £344,000 in the year to June 30, 2016, said Monitise clients would be ‘served well’ by Wisconsin-based Fiserv whose offer of 2.9p per share is 26pc more than the company’s 2.3p closing price before the deal was announced. Fiserv, whose boss Jeffery Yabuki was paid £7.8m in 2015, is the latest foreign firm to buy a UK company after the fall in the pound following the Brexit vote made British companies look cheap. there are concerns the UK is bad at supporting tech companies once they get beyond being a start-up.
Many struggle to find the billions of pounds needed to reach the next level in the City, and are forced into the arms of the Silicon Valley giants so they can carry on growing.
by James Burton and Matt Oliver