Soaring Dollar Drives Brinks Acquisition of NoteMachine

As the dollar hits record highs against the British pound sterling, Brinks Company announced its acquisition of NoteMachine, one of the United Kingdom’s leading ATM networks. Valued at $179 million, the deal is structured as an equity purchase and will be financed using cash on hand plus an existing credit facility.

Brinks, “a global leader in tech-enabled cash management, with a strong presence in ATM outsourcing,” will add NoteMachine’s 9,000 ATMs to expand its ATM managed services business to approximately 130,000 machines worldwide. Corsair Capital currently owns a majority stake in NoteMachine and will be exiting with this deal.

Global M&A activity plummeted last quarter, falling 42% from Q2 to the lowest Q3 figure in a decade. With the U.S. dollar surging against other currencies, it is making foreign entities relatively less expensive for domestic buyers and analysts predict that might propel American companies to go on an overseas buying spree. 

The dollar has soared as the global economic and geopolitical turmoil has led many to the relative “safe haven” that the U.S. dollar represents. Further, the U.S Federal Reserve has aggressively raised interest rates from near zero at the start of 2022 to a range of 3% to 3.25%, as it battles to bring inflation in check.

Last week’s better-than-expected jobs report showed that employers hired more workers than expected in September. This shows that the Fed’s attempts to cool the economy – and thereby curb inflation – is not yet working as intended and will likely require further interest rate hikes. These factors have drove the U.S. dollar to a two decade high against a basket of currencies last month, and it remains up 18% for the year.

The dollar’s ascension is particularly noteworthy relative to the British Pound Sterling. The relative fall of the pound has been compounded by reaction to new PM Liz Truss economic agenda. As Bloomberg frames it, “Britain’s most radical package of tax cuts since 1972, combined with plans for large-scale borrowing, have taken financial markets by surprise and triggered a slump in the pound to a record low.”

US Dollar vs. Pound Sterling

While these exchange rate fluctuations are not referenced in the companies’ joint press release, they played necessarily factored into the deal’s valuation. It is likely that other U.S. companies will acquire other U.K. and other foreign companies in the coming months.