Apollo closing in on $2.3bn deal to buy Worldline

Investment fund Apollo Global Management is closing in on a deal to buy the point-of-sale (POS) terminal business of France-based Worldline for nearly $2.3bn, according to a report in The Wall Street Journal on Friday.

Worldline shares were rallying 8% in Paris trading, while Apollo’s stock was still inactive in premarket trading. Citing people familiar with the matter, the WSJ report said the deal could be announced in the coming days.  Apollo would acquire in the deal hardware that allows consumers to use mobile phones any payment cards to make purchases, the report said. The U.S.-listed shares of Worldline have dropped 11.9% over the past three months and Apollo’s stock has dropped 7.0%, while the S&P 500 SPX has slipped 3.1%.

The proposed deal is the latest bet on the continued growth of digital payments. The New York-based buyout giant would acquire hardware that allows consumers to use their mobile phones and payment cards to make purchases. The pandemic has accelerated the adoption of digital payments over cash among both consumers and businesses.

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The deal, which is expected to be valued at close to €2bn, equivalent to around $2.3bn, could be announced in the coming days, assuming the talks don’t break down at the last minute, some of the people familiar with the matter said.

Payments businesses have historically proven lucrative investments for private-equity firms, and the trend toward digital commerce has only boosted the appeal of such companies. In one of the most recent deals, U.S. buyout firm Hellman & Friedman LLC last year completed the sale of Nets Group, a Nordic-based payments company, to Italy’s Nexi SpA for about €6bn.

Worldline has been restructuring to focus primarily on providing cloud-based payment services that generate recurring revenue, as well as its legacy, lower-margin hardware and software terminal business. It launched a strategic review of the business, including its possible sale, in October 2020, and Apollo has previously been reported as among the front-runners to acquire it.

The review was launched after Wordline completed its €7.8bn acquisition of crosstown rival Ingenico SA. This consolidated its position as one of Europe’s biggest payments companies, particularly in areas such as authorizing digital transactions that are software based.

Paris-based Worldline launched the review in October 2020 after it had completed its €6bn acquisition of crosstown rival Ingenico SA to consolidate its position as one of Europe’s biggest payments companies, particularly in areas such as authorizing digital transactions that are software based.

At that time, Worldline suggested that the hardware-terminal business might need new management and funding to accelerate its move to a software-as-a-service business model.

Worldline’s terminal business is Europe’s No. 1 provider of point-of-sale terminals technology, based on terminals shipped in 2019, according to Nilson Report. In the U.S., Worldline is the No. 2 player, behind VeriFone, Inc.

Apollo isn’t the first private-equity firm to make a bet on a payments terminal business. In 2018, a group led by U.S.-based buyout firm Francisco Partners acquired VeriFone for $2.6bn.

Source: News Update

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