(Bloomberg) — Italy’s Nexi SpA agreed to buy SIA SpA in an all-share deal that will create one of Europe’s biggest payment providers.
The transaction, which values closely held SIA at 4.56 billion euros ($5.3 billion) will give Nexi shareholders about 70% of the joint company. The combined business will have annual revenue of about 1.8 billion euros and a market value of more than 15 billion euros, making it one of Italy’s top-10 listed businesses.
“This operation will contribute to accelerating our country on the path of digitalization toward a cashless society, SIA Chief Executive Officer Nicola Cordone said in a statement. “This is in line with the mission we have worked on with pride, commitment and dedication for the past 40 years.”
The firms wrapped up more than a year of negotiations as payment providers across Europe look for deals that can add scale. The merger creates a company with about 2 million merchants and 120 million cards, potentially a stronger competitor to France’s Worldline SA, which agreed in February to acquire Ingenico Group SA in a 7.8 billion-euro deal.
Nexi CEO Paolo Bertoluzzo will lead the new group and Cordone will stay until the deal closes, according to the statement. Nexi expects about 150 million euros in recurring cash synergies from the deal, with completion expected in the summer of 2021. The company will exchange 1.5761 of its shares for each one SIA.
Nexi rose the most in almost a month in Milan trading at the opening. The shares climbed as much as 7.7% and were up 3.9% at 17.55 euros as of 9:40 a.m.
“Terms appear reasonable with synergies running ahead of our expectations,” Jefferies analysts including Paul Kratz said in a note. “We view the SIA-Nexi merger as a strategically important deal for Nexi and may help accelerate consolidation of the Italian acquiring market.”
Discussions have been on the brink of collapse several times over divergences on governance and valuations. In the last few weeks talks intensified after SIA reached an accord to keep Italian lender UniCredit SpA as its main client, a key sticking point in determining its valuation, people with knowledge of the matter have said.
SIA, which is mainly owned by the Italian government through its Cassa Depositi e Prestiti SpA arm, counts Nexi and UniCredit among its biggest customers. In February, SIA’s board approved a plan for its own listing, after Nexi raised $2.3 billion in Europe’s biggest IPO last year that left its main investors, Advent International, Bain Capital and Clessidra SGR, with a joint 33% stake.
CDP will be the biggest investor in the combined company, with a stake of about 25%.
Nexi is being advised by BofA Securities, HSBC Bank and Mediobanca, while SIA is being advised by JPMorgan.
(Updates with synergies, expected closing in fifth paragraph, analyst comment in sixth.)
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