By purchasing leading platform Reward Gateway, Edenred expedites the expansion of its Employee Benefits products into the Employee Engagement space.
Reward Gateway, a top employee engagement platform with strong positions in the UK and Australia and presence in the US, has announced the acquisition of 100% of its share capital by Edenred, a global leader in employee benefits and a leading digital platform for services and payments. Reward Gateway provides a comprehensive array of services, including employee savings, rewards and recognition, wellness, and corporate social engagement, enabling human resources departments to create the ideal combination of engagement tools.
Reward Gateway is a rapidly expanding corporation that has developed a successful, highly lucrative, and sustainable business strategy. This acquisition, which costs £1.15 billion and values Reward Gateway at 20 times EV/EBITDA at 23 percent, represents a significant advancement in Edenred’s Beyond22-25 strategic strategy. Edenred will speed up the strengthening of its Employee Benefits value proposition in line with its mission to be the most reputable global Employee Benefits & Engagement platform by consolidating Reward Gateway’s strong leading positions and expanding its geographic scope in selected key countries.
“We are pleased to announce the acquisition of Reward Gateway and are looking forward to welcoming their teams in the Edenred world,” stated Bertrand Dumazy, chairman and CEO of Edenred. By incorporating this top employee engagement platform, we are significantly expanding our employee benefits offering and giving HR managers a wide range of tools to help them attract top talent to their company. We will be looking at scaling Reward Gateway outside of its existing footprint in a few key countries, even though it is delivering us top positions in the UK, Australia, and a promising presence in the US market. Reward Gateway routinely produces significant double-digit growth and excellent profits thanks to its business model, which is based on an effective and completely scalable SaaS3 platform. High potential for synergy exists when our people, our solutions, our customer bases, and our technologies are combined. With this acquisition, Edenred has a one-of-a-kind chance to quicken the implementation of its Beyond plan. A bold move in line with our ambition to be the most dependable platform for employee benefits and engagement worldwide.
Reward Gateway’s CEO, Nick Burns, stated: “We are incredibly happy to join Edenred. Reward Gateway’s business operations and technological capabilities combined with Edenred’s position as a market leader serving 1 million corporate clients across 45 countries provide an expedited route to realize our vision of “making the world a better place to work.” In order to create specialized solutions for certain markets, we will take advantage of economies of scale as we work toward a single, integrated platform. By combining our individual strengths—commercial reach, product innovation, and cutting-edge technology—we will be better able to provide HR leaders a truly competitive solution.
Reward Gateway, a successful company
Reward Gateway is a top provider of SaaS Employee Engagement platforms and was established in the UK in 2006. Reward Gateway is the go-to partner for HR leaders to build healthier, stronger, and more resilient businesses, to make the world a better place to work, with more than 4,000 customers and 8 million employees utilizing its products in the UK, in Australia, and in the US. Reward Gateway’s service gives HR managers complete flexibility to engage, encourage, and retain their employees since it includes a variety of engagement tools, including market-leading employee savings, reward and recognition, communications, surveys, and well-being solutions.
Reward Gateway assists in creating a best-in-class, streamlined employee experience that is entirely tailored for each firm through a comprehensive and flexible platform. Reward Gateway provides companies with an automated experience through open API interfaces with more than 40 HRIS4, payroll, collaborative tools, benefits, and third-party software suppliers.
Over the past few years, Reward Gateway has had constant double-digit sales growth and strong profitability. In FY2023, it projects to make £95 million in sales and £45 million in EBITDA.
Adding to Edenred’s value offering in the rapidly expanding employee engagement industry
Through the purchase of Reward Gateway, Edenred gains access to a sizable market with excellent penetration potential and room for growth. Employee engagement is a market with a combined value of £1.9 billion in the UK and Australia, where Reward Gateway is the market leader, and it is predicted to expand by more than 10% annually5. Reward Gateway has begun establishing a presence in the US market, which alone generates £4.5 billion in revenue.
Employee engagement has become more important due to structural developments that have emerged in a post-pandemic setting, such as the acceleration of remote working and the talent war, which have prompted HR professionals to use perks and engagement solutions as differentiators. Additionally, rising concerns about consumer purchasing power have sharply increased the focus on employee savings options.
A tactical acquisition supporting Edenred’s goal of being the go-to platform for employees
Over the years, Edenred has effectively expanded its offering into perks other than meals and food. With the recently announced acquisition of GOintegro in Latin America, the Group has strengthened its already impressive offering in Employee Benefits & Savings platforms across 17 countries.
The acquisition of Reward Gateway is a significant turning point in the implementation of the Beyond22-25 strategy plan, positioning Edenred to be the most dependable worldwide Employee Benefits & Engagement platform. Reward Gateway offers Edenred a special chance to further expand its footprint by entering new promising and quickly-growing markets like the USA and Australia. By broadening its Employee Savings offer, integrating new services like well-being, and expanding its value proposition to Rewards & Recognition solutions.
A deal with significant anticipated synergies
The projected roll-out of Reward Gateway in six important Edenred nations (Belgium, France, Germany, Italy, Romania, and Spain) will significantly expand Edenred’s addressed market and provide more operating revenue in addition to integration benefits. Increased cross-selling potential with both firms’ current clients will fuel business synergies and further enhance client retention through platform solutions and embedded experiences.
Funds administered by the private equity firms Abry Partners and Castik Capital currently own Reward Gateway. Edenred will pay for the acquisition in full in cash, with the remainder coming from on-hand cash and a €1 billion bridge loan that will be eventually refinanced on the debt capital markets. From 2024 on, the acquisition will increase group EPS. On a standalone basis, this value-creating acquisition will be very accretive, and Edenred will also gain significantly from cost, technological, and marketing synergies.
Within a few days, the transaction is anticipated to be completed. As of the closing date, Reward Gateway will be fully consolidated in Edenred’s financial statements.
“It was a pleasure supporting the Reward Gateway team over the last two years as we partnered with Castik Capital to help transform the company into a leading global SaaS engagement platform,” stated Brian St. Jean, Partner, and Austin Heiman, Principal at Abry Partners. We think the company is well-positioned to maintain its market-leading position, and we are sure that Edenred is the best partner to help the company’s remarkable performance go forward even faster.
“We’d like to thank the Reward Gateway team as well as Abry Partners for the great collaboration over the past two years,” stated Michael Phillips, Partner at Castik Capital. Reward Gateway made considerable investments throughout our relationship to expand its self-service SaaS offering and further solidify its position in the US, UK, and Australia. We wish Reward Gateway the best in the future and will pay close attention to how the company’s growth within Edenred continues to be robust.