Clipp bought by Mobile Embrace as 20,000 pubgoers go cashless

More than 20,000 pub-goers across Australia use the Clipp cashless transaction system where they pay for drinks and food via a smartphone app in more than 570 different hotels and restaurants.

One of Clipp's co-founders, Greg Taylor, says the uptake from venues and consumers 'represents a very sound endorsement of the technology'. (Photo: Christopher Pearce)

The business will now have a new ownership structure after ASX-listed Mobile Embrace agreed to pay $4.7 million under a two-step deal to buy up to 72 per cent of Clipp.

Mobile Embrace announced the deal to the Australian Securities Exchange on Wednesday. The company entered a trading halt on the day prior after Fairfax Media revealed that the two firms were in serious negotiations about a buyout.

The $1.5 billion Woolworths pubs division ALH is one of the biggest users of the Clipp app, with 180 of its 330 pubs using the cashless system. ALH is the largest pubs group in Australia and is 75 per cent owned by Woolworths, and 25 per cent by hotels and gaming billionaire Bruce Mathieson.

One of Clipp's co-founders, Greg Taylor, said on Wednesday the uptake from venues and consumers "represents a very sound endorsement of the technology".

Under the deal, 31 per cent of Clipp has been acquired from existing shareholders of Clipp by Mobile Embrace through the issue of 4.59 million new Mobile Embrace shares at 26¢ per share. A $3.5 million convertible note has also been issued to Clipp, with quarterly drawdown of funds over the next 18 months.

Mobile Embrace can convert any drawn down funds into equity at any stage and if fully drawn and converted into ordinary shares in Clipp, the ASX-listed firm would hold a total stake of 72 per cent in Clipp.

A further 2.29 million options in Mobile Embrace exercisable at 39¢ have also been issued to some of the early stage investors in Clipp.

Mobile Embrace chief executive officer Chris Thorpe said he believed that Clipp "has a great deal of unlocked value".

Clipp's 20,000 users currently transact around $5 million of gross retail revenue through the smartphone app.

Source: The Sydney Morning Herald, Simon Evans, June 10^th 2015