Mobile money companyMonitise(LSE: MONI) put itself up for sale several weeks ago but, so far, no buyer has emerged. But it looks as if European banking giantSantander(LSE: BNC) could be the perfect suitor for the company.
You see, theres not much value left in Monitises business model. The company continues to lose money hand over fist. However, there is value in the companys existing relationships with banks. One of these banks is Santander.
Whats more, Santander is looking to increase its own digital presence.Indeed, Santander has 92m retail customers globally, of which only 12.2m do most of their banking with Santander.
Management has stated that it wants to hike this figure to 17m by 2017, which the bank believes could add 2bn to 3bn of additional income.
Then theres Monitises partnership with IBM to consider.
Value in the cloud
In order to reassure customers about the security of their online accounts, Santander is to be the first global bank to offer cloud data storage services to corporate clients. As one of the worlds largest tech companies with a huge presence in the cloud computing sector, IBM could be a key partner for Santanders cloud development IBM could be considered to be another bidder for Monitise.
Still, as mentioned above, Monitise already has a number of valuable relationships with European banks and other large corporate clients, which would give Santander a huge base from which to sell its new cloud offering. If Santander snaps up Monitise for itself, Europes largest bank could quickly find itself the data-and payment-processing company of choice for large financial institutions around Europe. This would align with the banks goal of become more digitally orientated and expand the groups influence.
Time to buy
Should investors buy Monitise ahead of a possible deal? Well, buying in the expectation of a possible takeover is often a fools errand. Theres no guaranteethat this time itll be any different.
Moreover, Monitise is struggling to turn a profit and the companys losses are only increasing. For example, the companys fiscal first-half 2015 results showed that group revenue had fallen to 42.4m, from 46.5m during the first half of 2014. The companys statutory loss after tax rose to56.8m compared to a loss of 22.0m as reported in the year-ago period.
Nevertheless, Monitise does have potential — the company has plenty of wealthy backers who are willing to continue to support the group.
But I strongly recommend that you do your own research before making any trading decision and Monitise may not fit your own personal risk profile. To help you assess the company, our top analysts have put togetherthis new report from The Motley Fool.
The report guidesyou through the seven key steps all successful investors follow and explains how spending just 20 minutes a month could help you create a portfolio that could bring youcloser to financial freedomfor life.
Click hereto check out the report—it’s completely free and comeswith nofurther obligation.
Get FREE Issues of The Motley Fool Collective
Get straightforward advice on whats really happening with the stock markets, direct to your inbox. Help yourself with our FREE email newsletter designed to help you protect and grow your portfolio wealth.
By providing your email address, you consent to receiving further information on our goods and services and those of our business partners. To opt-out of receiving this information click here. All information provided is governed by our Privacy Statement.