Long time rivals Nets from Denmark and Italian fintech Nexi have announced that they are in talks to finalise an “all-share” merger deal. With Nexi in negotiations to buy Nets, the companies will together create a leading European player in the digital payments landscape with access to unparalleled scale, technology capabilities, and product portfolio, to become a “one-stop-shop” for payments with a diversified geographic reach.
This move comes after an agreement was reached last month for a takeover by Nexi of Italian rival, SIA, which signals the ongoing consolidation in the European payments industry. The deal is said to be worth around $10 billion and Nexi (with a current market value of $9.93 billion) is said to have beat out competition from U.S. company Global Payments GPN.N for the acquisition.
The deal will also include long-term lock-up commitments by Nets’ current shareholders and will deliver more products and services, offering customers “enhanced exposure to eCommerce.” Once merged, Nexi will build a formidable footprint in key regions such as the Nordics and Central and Eastern Europe.
Nets has experienced significant transformation and investment, which has swiftly accelerated the growth of its core business over the last three years following U.S. private equity firm Hellman & Friedman’s takeover of the company. Following the takeover, Hellman & Friedman delisted Nets from the Copenhagen stock exchange while focusing on growth organically and through strategic M&A.
Nets is currently completing the process of the sale of its account-to-account business to Mastercard which is slated to finalize by its merger with Nexi. After the Mastercard sale, the company will be focusing on merchant services, with a strong e-commerce exposure and proposition, and through issuing processing and innovative digital payments methods.
Patrick Healy who leads Hellman & Friedman was said to have started marketing the business over the summer approaching firms such as U.S. based Fiserv and Global Payments alongside Nexi. Nets and Nexi are said to be receiving support from U.S. investment companies Bain Capital and Advent International. Advised by Centerview Partners, Nexi is said to be waiting for market volatility to ease following the election before entering a binding agreement with Nets.
In 2019 Nets generated revenues of €1 billion and adjusted EBITDA of €0.4 billion and has a growth profile over the medium term broadly in line with that of Nexi. If successful, the sale would be the latest win in the wave of consolidation in the payments industry and would result in the fourth largest payments firm.