SpA agreed late Sunday to acquire crosstown fintech rival SIA SpA for about €4.6 billion, equivalent to almost $5.4 billion, in a stock deal that creates a European giant in the fast-consolidating payments sector.
The deal—that will result in a company with an estimated combined market capitalization of around €15 billion—marks the end of monthslong negotiations. The combined market value is based on Nexi’s market capitalization on Friday of about €10.6 billion, plus the amount it is paying in shares for closely-held SIA, which is majority-owned by an arm of the Italian government. Nexi is listed on the Milan bourse.
The payments sector has attracted a string of big deals over the past few years, as companies seek greater scale to keep costs low, add customers and fund investments in new technology, while simultaneously ensuring security amid greater regulatory scrutiny. In February, Worldline SA struck a €7.8 billion pact to acquire
Ingenico Group SA
to create a France-based powerhouse. The month prior in the U.S.,
agreed to pay $5.3 billion for financial-technology firm Plaid Inc.
Fallout from the pandemic is giving the industry even more reason to seek additional scale by accelerating the need for consumers and businesses to conduct transactions online.
Under the Italian deal, Nexi’s shareholders will own 70% of the combined entity, while SIA’s investors will hold the remaining 30%, as the new company bets on the bigger platform to seek additional acquisitions in Europe’s payments-processing sector, executives for the two companies said.
Cassa Depositi e Prestiti, a development bank controlled by the Italian government, will own the biggest stake, 25%, of the newly created group. Other shareholders include three private-equity funds, Advent, Clessidra and Bain Capital as well as Italian lender
SpA, among others.
Nexi, based in Milan, is currently Italy’s biggest payments processor, generating revenue of €984.1 million last year. Its services and technology are used by consumers, business and governments to make, process and manage digital payments in-store or online. Through Friday, its stock was up 34% so far this year, underscoring investors’ bet on payment companies benefiting from the pandemic-induced lockdown. Nexi was trading 1.6% lower at €16.61 a share in European trading on Monday.
Still, Nexi ranks outside the top 10 biggest payments companies in Europe measured by value and volume of card transactions handled last year, according to Nilson Report, a data provider.
By acquiring SIA, also based in Milan, Nexi would almost double its 2019 annual revenue to about €1.8 billion, while bolstering its operations in Europe. SIA provides services across 50 countries and operates through subsidiaries in Austria, Croatia, Germany, Greece, the Czech Republic, Romania, Serbia, Slovakia, South Africa and Hungary, according to the company’s website.
The all-Italian deal also plays into the latest efforts of governments in Italy and other European countries to protect and foster the development of key businesses that could be susceptible to unwanted takeovers because of the economic uncertainty triggered by the coronavirus.
Last month, the Italian government helped push the
London Stock Exchange
to pursue a deal for the sale of Borsa Italiana Group to a consortium comprising
NV, CDP and Intesa Sanpaolo, supporting a move that would help to ensure Italian authorities have influence over the operation.
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Appeared in the October 6, 2020, print edition as ‘Italian Deal Combines Payments Rivals.’