The resulting entity will be a fintech powerhouse and one of the ten largest companies by market capitalization in Italy.

Nexi Spa and SIA Spa, both companies in the payments sector, announced Monday their merger by incorporation of SIA into Nexi. The transaction will create a digital behemoth with approximately €1.8 billion in annual revenues and about €1 billion of EBITDA. The market cap of the merged organization will be approximately €15 billion. (Nexi)

The merged company will have a customer base of about 2 million merchants and 120 million cards. It will process an overall number of annual transactions equal to more than 21 billion. It will have a workforce of 5,500 individuals across 15 nations.

The transaction

Under the terms of the all-stock deal, 1.5761 Nexi shares will exchange for each SIA share. According to Bloomberg, SIA is being valued at € 4.56 billion ($ 5.3 billion).

Current SIA shareholders will receive a stake in the share capital of the New Group equal to about 30%, while current Nexi shareholders will maintain a stake of approximately 70%.

The transaction will deliver synergies by way of €150 million run-rate recurring synergies, which includes €100 million in lower operating expenses, ~€35 million in increased operating margin due to ~€50 million revenues synergies, and ~€15 million of capex efficiencies.

The new company will also enjoy of one-off capex saving of € 65 million.

It is expected that the merger will be double-digit cash EPS accretive in 2022.

According to Bloomberg, analysts at Jefferies considered the terms as reasonable with synergies running ahead of expectations.

Digital outlook

“The new PayTech company, through its independent role and having CDP as an anchor investor, will continue on its growth path as large Italian public company contributing, to an even greater extent, together with its partner banks, to further accelerate the digital payments penetration in Italy and to the digitalization and modernization of the Country in favor of citizens, enterprises and Public Administration,” said Paolo Bertoluzzo, CEO of Nexi.

The CEO of SIA, Mr. Nicola Cordone, said the merger will create a single large Italian digital payments player and a leader in Europe. “This operation will contribute to accelerate our country on the path of digitalization towards a cashless society,” he added.

Calling the merged company as the “new paytech”, Nexi said in its statement that it will participate in the entire digital payments ecosystem, from national to international banking, large to small retailers, as well as Public Administration.

Management

The combined company will be led by Paolo Bertoluzzo (currently the CEO of Nexi) as CEO and General Manager.

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