Cantaloupe Completes Three Square Market Acquisition

Cantaloupe Inc., a digital payments and software company, has completed its acquisition of Three Square Market (32M) for $41 million. 32M is a provider of software and self-service kiosk-based point-of-sale and payment solutions that power the micro-market industry.

In a recent blog post from Cantaloupe, the company compares micro markets to unstaffed, self-service retail spaces much like small-format convenience stores. In the U.S. alone, there are almost 26,000 active micro market locations, according to Cantaloupe, which believes that number will continue to grow as micro markets emerge as a vending and retail alternative. 

The 32M acquisition delivers full-service capabilities to Cantaloupe’s presence in the growing micro-market space, while also immediately expanding Cantaloupe’s international footprint for its full suite of products, according to a news release. The deal also adds about 40 people to Cantaloupe's 230-person team.

“The acquisition of 32M, with its expansive portfolio of micro-market technology and broad geographic footprint, immediately accelerates two of our most important strategic growth priorities,” said Ravi Venkatesan, CEO of Cantaloupe, in the release.

Acquisition highlights:

• Provides a comprehensive line of self-service kiosks, smart coolers and cloud-based software, already integrated with Cantaloupe’s Seed Markets software platform.
• Expands Cantaloupe’s micro-market presence by adding nearly 3,000 locations across North America and international markets, including the U.K., Sweden and Romania.
• Increases direct salesforce and customer service teams in both the U.S. and U.K.
• Generates opportunities for revenue synergies through converting current 32M customers to Seed Markets software platform, as well as cross-selling 32M’s micro market technology to Cantaloupe’s existing food and beverage customers.

Additionally, 32M is already an integrated partner of Cantaloupe’s Seed Markets software platform, which Venkatesan says will enable the company to “capture additional revenue synergies through cross-sell and upsell opportunities” throughout the combined company’s customer base.

“This exciting acquisition builds upon the strong organic growth we are experiencing in our core business today,” Venkatesan added. “This combination will accelerate our organic top line growth while also expanding our margins, offering attractive financial returns to our investors. We believe that this combination also enhances the value and attractiveness of our company for future partners and strategic opportunities.”

Transaction details:

• The $41 million deal was funded with 90% cash and 10% stock. (The stock consideration is subject to a two-year vesting schedule.)
• Cantaloupe has funded the cash portion with $25 million of debt from its existing credit facility and existing cash on hand.
• Cantaloupe estimates 32M will produce $19 million of revenue with EBITDA margins of 20%+ for calendar year 2022 on a standalone basis.
• Piper Sandler & Co. served as financial advisor and King & Spalding served as legal advisor to Cantaloupe.