UPDATE: Nexi Buys Nets in $9.2 Billion Deal to Create Payment Giant

Italian payments processor Nexi SpA agreed to buy private equity-owned rival Nets A/S, a month after purchasing a state-backed competitor and creating one of Europe’s biggest payment providers.

The all-share deal values Copenhagen-based Nets at 7.8 billion euros ($9.2 billion), including 1.8 billion euros of debt, the companies said in a joint statement Sunday. Nets shareholders will receive 406.6 million new Nexi shares, initially resulting in 39% of the combined entity.

The transaction adds to a wave of consolidation sweeping the continent’s financial services industry, and will extend the Italian company’s reach across Europe — it has operations spanning Italy, German-speaking countries and the Nordics.

The two firms wrapped up weeks of talks with a deal that will generate about 170 million euros of synergies per year. The transaction is supported by key shareholders of Nexi and Nets, which will remain invested in the combined group.

Chief Executive Officer Paolo Bertoluzzo has expanded Nexi through acquisitions — he announced his pursuit of Nets just days after agreeing to the milestone acquisition of Italy’s SIA SpA for 4.6 billion euros. When the SIA purchase is complete, Nets’ stake in Nexi will decrease to 31%.

M&A Wave

The consolidation started last year in the U.S., when Fiserv Inc. agreed to take over First Data Corp. in a deal valued at the time at $22 billion. European rivals have since tried to bulk up to remain competitive, with France’s Worldline SA’s agreeing in February to buy Ingenico Group SA.

Nets’ private-equity owners invited a group of potential buyers to submit offers, Bloomberg reported in October. On Nov. 2, Nexi said it was entering a 10-day exclusive negotiating period, later extended to Nov. 16, to pursue a binding agreement to buy Nets, which is backed by buyout firm Hellman & Friedman.

Founded in 1984, Hellman & Friedman has a long track record in financial-services investments. The company owns a platform called AllFunds which is a consolidator of fund administration businesses and used to be an investor in stock exchange Nasdaq. Since its inception the fund raised over $50 billion of committed capital and is currently deploying its ninth fund with over $16.5 billion firepower in equity.

Centerview Partners, HSBC Holdings Plc BofA Securities and Goldman Sachs advised Nexi on the transaction, while Lazard advised Nexi’s related parties committee. JPMorgan Chase & Co and Credit Suisse advised Nets, the firms said in the statement.

In third quarter Nexi’s revenue increased 1% to 276 million euros. Volumes recovered in the period, with acquiring transactions on Italian cards back to pre Covid-19 growth levels, but the company said it has seen a new slowdown in volumes since October due to the second wave of the virus.

Source: Bloomberg