Worldline SA agreed to buy rival Ingenico Group SA in a 7.8 billion-euro ($8.6 billion) deal the French technology companies say will form one of the largest payment-services providers.
The two companies had been circling each other for years, and Worldline Chief Executive Officer Gilles Grapinet said on a conference call Monday that Ingenico’s reorganization last year made it the right time to bid.
The takeover – the biggest of the year so far in Europe – continues last year’s spate of payments company mergers, which included a series of major deals from Fiserv Inc., Fidelity National Information Services Inc. and Global Payments Inc.
Ingenico shareholders will receive 123.10 euros a share in cash or a mixture of cash and shares, the companies said Monday. That’s 17% higher than the stock’s last closing price. Worldline is also offering to buy bonds that are convertible into Ingenico shares. Worldline shareholders will own about 65% of the combined company.
Ingenico gained as much as 14% in Paris on Monday, rising to 119.9 euros, the biggest intraday move in more than a year. Worldline fell as much as 8.6%.
The deal looks “very positive” for Worldline at first glance, giving the company an opportunity to add to its European leadership team and increase its market share, analysts at Bryan Garnier & Co. said in a note Monday. The combined company will also have a more diversified profile than its U.S. peers, they said.
Read more about Ingenico’s management shakeup here.
The deal comes after a number of challenging years for Ingenico, which provides payments processing services to customers including banks, retailers and e-commerce sites, and is one of the few large firms to remain independent in the rapidly consolidating payments industry in Europe.
Ingenico for years has been pushing to refocus from its legacy business -- capturing transactions on behalf of banks or credit card companies using hardware terminals in stores -- toward new services in areas like online shopping.
In November 2018, Ingenico CEO Philippe Lazare was removed following a request from the board. Lazare, who led the company for 11 years, had been under increasing pressure over its performance and management struggled to convince investors of the merits of its legacy terminals business.
Ingenico has since recovered, its shares more than doubling in the past year after Chief Operating Officer Nicolas Huss took over as CEO in a move many thought could lead to a potential deal. The same month, Natixis SA declined to bid for Ingenico after holding preliminary talks.
“Timing is everything,” Grapinet said when asked on a call with analysts why the company didn’t attempt to buy Ingenico last year. “If you look at the stock price, it could’ve been a bargain, but I’m not sure the board of Ingenico would’ve been ready to sell.”
Worldline was spun out of French computer-services provider Atos via an initial public offering in 2014, and with a 11 billion-euro market value is now bigger than its previous owner. In 2018 Worldline snapped up SIX Group AG’s payments business for 2.3 billion euros, in one of the first deals that sparked the ongoing wave of consolidation in the industry.
“The combination of Worldline and Ingenico offers a unique opportunity to create the undisputed European champion in payments,” Ingenico Chairman Bernard Bourigeaud said in a statement Monday. “This transaction comes at the time of accelerating consolidation of the industry.”
French state investor and Ingenico shareholder Bpifrance Financement SA said it “fully supports” the deal and in a statement said it was “committed to contribute its Ingenico shares to Worldline’s public offer and intends to become a long-term reference shareholder of the combined entity.” Bpifrance owns about 5.3% of Ingenico shares according to data compiled by Bloomberg.
SIX Group and Atos, Worldline’s largest shareholders, are also in favor of the deal.
Payments dealmaking may be set to continue. Worldline will become the “platform of choice for further consolidation in Europe” Grapinet said on the call.
Investors have been keen to cash in on alternatives to traditional banking services. Vista Equity Partners is considering selling a stake in Finastra in a deal that could value the company at more than $10 billion including debt, Bloomberg News reported in October.
Earlier in January Visa Inc. agreed to pay $5.3 billion for Plaid, a fintech firm that connects popular apps like Venmo to customers’ data in the established banking system.
The combined market value of Ingenico and Worldline will be about 19 billion euros as of trading Monday, leapfrogging rival Wirecard AG.
— With assistance by Tara Patel, and Thomas Mulier