FinTech: Another Consolidation Among Legacy Payment Players; Worldline Buys Ingenico

February 5, 2020 | FinTech, Takeovers and Buyouts
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Two French payment giants are in the fourth mega fintech deal after 2019.

With new-fangled fintech disruptors snapping at their heels, two legacy payment processor giants in Europe have joined forces in an $8.6 billion mega-deal. French payment company Worldline will acquire domestic rival Ingenico to create the industry’s number four player, according to CNBC.

Consolidation pressures

Ecommerce and smartphones have fuelled the emergence of digital payments players, helped by huge chunks of venture finance.

These are asset-light, technology-based, rapidly maturing startups.  They have attracted younger, tech-savvy customers seeking convenience and speed of transactions.

Therefore, names like America’s Stripe, India’s Paytm, and Britain’s Checkout.com are turning the heat on the traditional fintech players, hastening their consolidation.

The year 2019 itself saw three major deals. Fiserv purchased First Data for $22 billion, FIS bought Worldpay for $43 billion, and Global Payments netted TSYS for $21.5 billion.

Meanwhile, in 2020, Worldline snaps up Ingenico for $8.6 billion.

According to the Fintech Megadeals research report from Business Insider, the wave of consolidation in fintech is being triggered by:

  • multiple friction points for consumers and businesses in legacy payment systems
  • digitally enabled and innovative solutions from new entrants addressing these issues
  • moreover, defensive moves by legacy players to counter the new competition to:
  • boost transaction volumes, and
  • reduce costs to meet challenges from low margins and fees

The Worldline-Ingenico deal

Worldline’s deal to acquire Ingenico will comprise 81% stock and 19% cash. Therefore, Worldline will pay a 17% premium on Ingenico’s Friday closing price, at an implied equity valuation of $8.6 billion.

Ingenico shareholders will receive 11 shares of Worldline and 160.5 euros in cash in exchange for seven Ingenico shares in a primary tender offer. Further, Ingenico investors will receive 56 Worldline shares for 29 Ingenico shares in a secondary offer. That equates to an offer price of 123.10 per share held in Ingenico.

Meanwhile, the deal will result in cost savings of €250 million over the coming four years. It will also generate immediate double-digit EPS accretion.

Bernard Bourigeaud, Ingenico’s Chairman of the Board of Directors, said:

“The combination of Worldline and Ingenico offers a unique opportunity to create the undisputed European champion in payments on par with the largest international players.

This transaction comes at the time of accelerating consolidation of the industry and I am convinced that the joined forces of both leaders will deeply transform the industry.”

Related Story: FinTech: Visa Snaps Up Fintech Network Plaid for $5.3 Billion                                                   

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