Armaguard Pursues Further Negotiations Following Rejection of $26 Million Deal

Armaguard is looking for a new cash injection offer after turning down a $26 million (US$16.9 million) deal from major retailers and banks in the country.

On March 28, the currency transfer company rejected the offer from the Australian Banking Association, the big four banks, Woolworths, Coles, and Australia Post.

Instead, the parent company Linfox, owned by billionaire Lindsay Fox, will inject $10 million (US$6.5 million) into the business as Armaguard seeks solutions to its financial difficulties.

The company is currently in talks with the banks and retailers to negotiate a new way forward.

Armaguard CEO Mick Cronin stated that the company declined the group’s “timing ultimatum.”

He expressed confidence that with appropriate support from the industry, the business would achieve financial stability within a few months.

Australian Banking Association CEO Anna Bligh described the offer as a “generous” cash proposal made only after Armaguard indicated financial distress.

Concerns about the company’s future led Coles to temporarily halt cash deliveries to its stores until April 5, although the decision was later reversed.

Additionally, the maximum cash withdrawal amount in shops was reduced from $400 (US$260) to $200 (US$130), with no plans to revert the change.

AMP’s chief economist and investment strategy head, Dr. Shane Oliver, believes a new agreement will be reached with Armaguard, as it is unlikely that the banks or the government would allow a situation without currency providers.

Despite having a “near monopoly” since merging with competitor Prosegur in 2023, it remains challenging for the company to turn a profit due to the decreasing use of cash, he explained.

Dr. Oliver stated, “In the very short term Armaguard does hold all the cards because it’s a virtual monopoly.”

He added, “But virtual monopoly or not, there’s less and less money to be made in that business and they’re saying on the brink.”

He pointed out that Coles’ decision to lower withdrawal limits is part of the ongoing shift towards digital payments over cash transactions.

Dr. Oliver said, “It is a nuisance for them,” and continued, “They would be finding less and less of their customers want to use it.”

He concluded, “But it does present some difficulty for some people who are wedded to using cash if the ATMs close down in your suburb and your only alternative is the Woolies or the Coles to get cash out.”