Work continues at pace on the integration of Armaguard with Prosegur Australia – a key part of Armaguard business and fundamental to the future of cash as a viable method of payment.
In September 2023 Armaguard reached a significant milestone in its journey towards securing reliable access to cash in the Australian economy, with the legal completion of the merger between Armaguard and Prosegur’s Australian operations.
CEO Linfox Armaguard Group, Mick Cronin is delighted with the progress of the merger and optimistic of the outcomes it will achieve.
“The merger is currently on track,” Mick said, “and bringing together two businesses that have been in competition for decades is a complex undertaking.”
Achievements so far – synergies and efficiencies
It has been a busy couple of months to say the least. After the deal was completed in September, the integration project team – made up of representatives from across the two businesses – has been working at a rapid pace to bring together operations, and seize opportunities to reduce duplication and streamline processes.
The first stage of integration of Armaguard and Prosegur sites took place in October 2023, with further integrations scheduled for the first quarter of 2024. Completion of the integration is earmarked for mid-2024.
Despite the complexity and challenges of the merger process, Mick was heartened by the successes achieved so far.
“I think the biggest success for me has been the commitment of our people from both businesses and their willingness to come together to integrate highly complex and regulated operations – every day brings with it new challenges, and we really do have some of the brightest minds on the task.
“From an operational perspective we’re already realising some strong synergies by removing some of the duplication and excess capacity, which helps make our operations more sustainable.
“And for customers, we’re committed to maintaining service continuity. There might be some back-end adjustments such as branch boundary changes as the network is consolidated, but one of the overriding objectives is to keep any disruption to customers to an absolute minimum and ensure service continuity.”
What the merger means for our business
From a broader industry view, the merger represents the largest shakeup of the cash transport and processing industry in decades, and Mick is adamant that its ongoing evolution is the key to a sustainable business.
“For our industry, the decline in cash use over recent years is clearly the main motivation behind the merger – enabling us to streamline operations, remove costly duplication, and bring together the knowledge and expertise of two foundation players in the industry so that we can extract further efficiencies.”
The original submission to the ACCC seeking approval for the merger highlighted the costs associated with the ‘excess capacity’ in the industry as its biggest challenge, so by adapting capacity to suit demand, fixed costs can be driven down, maximising efficiency and achieving greater economies of scale.
And with Prosegur, there’s the opportunity to leverage the knowledge and opportunities of one of the world’s largest cash in transit businesses to consider new innovations within the industry.
The cash landscape
Mick said that despite the ever- increasing prevalence of electronic payments, rather than a cashless future that so many have been predicting for decades, he sees a future where cash is still used, at lower volumes.
“The federal government has committed to supporting Australians having continued access to cash,
so it will still be part of the payment landscape for the foreseeable future, and while the bulk of transactions may be carried out electronically, it’s our view that cash will continue to have a place.
Despite the ever-growing reliance on technology, recent service outages serves to remind us that no system is infallible, and while digital methods of payment will continue to dominate in the future, cash will continue to remain as a secure method of payment that is less exposed to system failures. In fact, during the recent communications service outage, our ATM network experienced a significant spike in demand as people reverted to cash to go about their day.
The merger of Armaguard and Prosegur in Australia is a huge step in maintaining the viability of the industry, but ultimately, it’s just one of many steps.
“We’re definitely open to involvement from outside parties, including government, in managing and maintaining Australians’ access to cash,” Mick said.
“I recently attended an industry roundtable chaired by Reserve Bank Governor Michelle Bullock to discuss the future of wholesale banknote distribution, which demonstrates the future of cash is front of mind to key decision and policy makers.”
What the merger means for our people
For many years, Armaguard and Prosegur in Australia were in direct competition, so one question that
is often asked in these situations is: how do you go from being rivals in the same marketplace to one company?
The reality is that the main aim was to secure the industry for the short to medium-term, with the impacts on team members a front and centre focus. The evolution of businesses and industries – whether it’s expansion, consolidation or rationalisation, brings with it a separate set of challenges from an employee perspective.
Mick is very clear on this point.
“From the outset, we’ve acknowledged that we’re two businesses coming together, and merging those two cultures, rather than trying to impose one upon the other.
“For our people, we understand that this chapter in our history represents a major change, but irrespective of the changes to our operating environment, we’re keeping our people informed throughout the entire process, with support systems in place in line with our LIFT values that we strive to live every day – loyalty, integrity, fairness and trust,” Mick said.