EUREKA, CA - Humboldt Merchant Services LP, one of the primary financial processors serving the adult entertainment industry, on Sept. 17 was acquired by Moneris Solutions Inc. of Canada.
A subsidiary transaction acquirer, Moneris U.S., is based in Chicago, IL. Both companies are affiliated with Harris Bank, based in Canada.
According to a prepared statement, Moneris will purchase "substantially all of the assets of HMS." The acquisition is subject to regulatory approval and is expected to close before the end of the year.
Included in the transaction are more than 18,000 merchant relationships, $2.5 billion in annual processing volume and the HMS name, staff and management team. Because the deal involves financial services companies, further details - including financial terms - will not be released until the transaction is finalized.
HMS and Moneris already have begun working to establish sponsorship arrangements with Harris Bank for HMS' new and existing merchants and registered independent sales organizations. The companies plan to "expand the ISO and contractor sales channel by providing a wider array of third-party and proprietary platforms and products to support future growth initiatives," the prepared statement noted. "The combined platforms and infrastructure will enable HMS and Moneris U.S. to serve multiple distribution channels effectively, providing a unified residual, commission and tracking system and enhancing service throughout the U.S. Further, Moneris U.S. values the talented and experienced HMS employee sales force and expects to further leverage existing referral relationships to provide these professionals additional cross-selling opportunities."
"We are extremely excited about becoming part of Moneris U.S.," said HMS President Ken Musante. "Moneris U.S. is part of one of North America's largest, most successful payment processors. We have identified numerous synergies that will make this partnership very compelling and position us well for future growth. On behalf of the management team, HMS is thrilled to become part of such a dynamic organization."
The acquisition will be good for Moneris, as well, according to President Greg Cohen.
"Acquiring Humboldt Merchant Services fits perfectly with our overall U.S. growth strategy," Cohen said. "Not only will the acquisition add over 18,000 merchants to our portfolio, but it will provide us new sales and distribution channels that will significantly expand our reach."
HMS Senior Vice President Hilda Tuel said the addition of HMS' clients will boost the percentage of American merchants in Harris Bank's portfolio of 350,000 merchants, most of which are Canadian.
Tuel also said Harris Bank is an especially strong financial entity, as it has not been a participant in the sub-prime lending industry that suffered monumental losses this year. She echoed Musante's statement and added that HMS employees are delighted with the new relationship.
"It was very exciting to have Greg Cohen, the president of Moneris, come to Eureka yesterday and talk to our staff," she said. "We are keeping our name, keeping all of our [85] employees and staying in the high-risk business. We're also staying in Eureka.
"As you can imagine, the past couple of months have been very hard," Tuel added. "I cannot express how grateful we are to our merchants, employees, business partners and gateways for their overwhelming support and continuing confidence. We could not have gotten through this without them."
Fifteen-year-old HMS has been under the Federal Deposit Insurance Corporation's receivership umbrella since late July when its previous owner, First National Bank of Nevada, was declared insolvent and closed by the U.S. Office of the Comptroller of the Currency. To date, the processing company has experienced no disruption of client services.
