Nexi and Nets in exclusive talks to create EU payments powerhouse

By Elisa Anzolin and Pamela Barbaglia

MILAN/LONDON (Reuters) - Italy's biggest payments group Nexi <NEXII.MI> said on Monday it was in exclusive takeover talks with Denmark's Nets over an $8 billion (£6 billion) deal which follows its multi-billion euro tie-up with Milan-based SIA less than a month ago.

Merging with private equity-backed Nets would give Milan-listed Nexi access to advanced digital payments markets in northern Europe, where the Scandinavian group has a leading position, as well as exposure to central and eastern Europe which offers growth potential.

Nexi said exclusive talks over an all-share merger would last 10 days.

Under a potential deal, Nets, which is controlled by U.S. buyout fund Hellman & Friedman, would be merged into Nexi, using the same multiples for expected 2020 core earnings.

Based on Nexi's Friday closing share price, this would value Nets at around 7.2 billion euros (£6.4 billion), including debt, versus Nexi's market capitalisation of 8.3 billion euros.

Consolidation in the payments industry is in full swing as companies, including France's Worldline <WLN.PA>, look to build scale to sustain investments and ride an acceleration in digital payment volumes in southern Europe as a result of the COVID-19 pandemic.

Nexi CEO Paolo Bertoluzzo had said when the SIA deal was announced on Oct. 4 that Nexi-SIA would be on the lookout for other deals to build a presence in key European markets.

Nexi shares were down 2.2% at 12.8 euros at 1600 GMT, against a 1.9% rise in Italy's blue-chip index <.FMTIB>.

Nexi said combining the two groups, which last year had just over 1 billion euros in revenues each, would result in annual synergies of 150 million euros.

The all-share deal structure comes with "long-term lock-up commitments" for Nets' investors who cannot immediately cash out.

On Friday, Reuters reported that Nexi was leading talks to buy Nets after seeing off competition from U.S. group Global Payments <GPN.N>.

Nexi said it was fully committed to swallowing SIA on the governance terms and timetable it announced in October.

The SIA merger, another all-share deal which is expected to close by the summer of 2021, valued SIA at 4.6 billion euros. It aims to create a leader in Italian payments in which state lender CDP will be the top investor with a 25% stake.

That is set to drop to 17% if the Nets deal goes through and Hellman & Friedman joins Nexi's shareholder register.

But CDP - which aims to build a significant presence in Italy's infrastructure, such as telecoms and motorways - could increase its investment in Nexi-SIA to secure a bigger shareholding in the future group, two people familiar with the matter said.

Centerview and HSBC <HSBA.L> are advising Nexi. Credit Suisse <CSGN.S> is working with Hellman & Friedman on the deal.

(Reporting by Elisa Anzolin in Milan and Pamela Barbaglia in London; Editing by Valentina Za/ Alexander Smith/Jane Merriman)