Dive Brief:

• Payment processor Shift4 Payments has purchased competitor SpotOn’s sports and entertainment business unit for $100 million in cash, Shift4 said Monday.
• With the purchase, Shift4 acquires all of SpotOn’s sports and entertainment customers and a portion of its employees, as well as some technology assets, Shift4 said in a Monday filing with the Securities and Exchange Commission.
• Shift4 and SpotOn declined to comment on the number of employees or customers Shift4 obtains through the deal. With the deal, SpotOn retains ownership of the source code for the software system to continue building on it in the restaurant space and is licensing the code to Shift4 to build on it for the sports and entertainment business only, SpotOn’s Chief Marketing Officer Kevin Bryla said in an interview Monday.

Dive Insight:

San Francisco-based payments and software company SpotOn has served restaurants, sports and entertainment clients and retailers. The company wasn’t looking to sell its sports and entertainment unit, but Shift4 made “a very attractive offer” when it approached SpotOn about a possible sale earlier this year, Bryla said. 

In 2021, SpotOn acquired Appetize, which gave SpotOn an entry into the sports and entertainment market along with Appetize’s technology assets, said Bryla, also SpotOn’s head of customer experience.

Allentown, Pennsylvania-based Shift4, which largely focuses on the hospitality, stadium and retail sectors, made its own acquisition in 2021 that expanded its presence in the stadium and venue payments market, scooping up point-of-sale provider VenueNext in 2021.

Shift4 executives have expressed a desire to push further into that market; prior to Monday’s announcement, Shift4 had about 150 sports and entertainment venue clients. The company aims to bundle services for these clients, offering mobile ordering, point-of-sale and payments processing for food, beverage and merchandise, and processing through a team’s ticketing platform. 

With the deal, Shift4 gains SpotOn’s customer relationships. Those include a number of major league sports teams, including the MLB’s New York Yankees and the NBA’s Dallas Mavericks, a spokesperson for SpotOn said.

The acquisition is consistent with Shift4’s approach to mergers and acquisitions, such as that of point-of-sale software firm Focus POS for $45 million in April, Goldman Sachs Analyst Will Nance wrote in a Monday note to investor clients.

The purchase is also “a significant move towards cementing [Shift4's] market share in the ticketing and stadiums vertical with the addition of marquee locations such as Madison Square Garden and Yankee Stadium (+others),” Nance wrote.

Shift4 will also take on some of SpotOn’s employees that have been focused on the sports and entertainment business, Bryla said, although he maintains SpotOn continues to have “around 2,000 employees.” Sports and entertainment “was not a massive part of our business,” Bryla said.

Shift4 also caters to the restaurant market, but the terms of the deal prohibit Shift4 from tapping the technology it’s licensing in that segment of its business, Bryla said.

The acquisition’s financial contribution this year will be immaterial to Shift4, but the company expects “the contribution to increase in 2024 as the revenue and operating models of Appetize are modified to align with that of Shift4,” the filing said. Taylor Lauber, Shift4’s president and chief strategy officer, declined to comment on the purchase and pointed to the SEC filing. 

With the sale, SpotOn plans to double down on its restaurant business. SpotOn currently serves tens of thousands of restaurants, Bryla said. He declined to provide a more specific number, but said the company’s sweet spot is with independent operators and restaurants with between one and 20 locations. 

The company will also maintain its presence in the retail sector, Bryla said.