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Italy's Nexi, SIA strike merger to create digital payments giant

Elisa Anzolin
·2-min read
FILE PHOTO: The headquarters of the Italian payments group Nexi are pictured in Milan
FILE PHOTO: The headquarters of the Italian payments group Nexi are pictured in Milan

By Elisa Anzolin

MILAN (Reuters) - Italy's biggest payments firm Nexi <NEXII.MI> on Monday announced a long-awaited merger with rival SIA to create a group with 1.8 billion euros ($2 billion) in annual revenue that looks to expand further in Europe.

Nexi and SIA have been in merger talks for more than a year-and-a-half to create a payments firm whose domestic market share Jefferies has estimated at around 70%. Differences over valuation and governance had held back a deal.

SIA is indirectly controlled by the Italian state through Cassa Depositi e Prestiti (CDP), which will own around a quarter of the new group.

"This transaction will create a large Italian paytech company ... with scale and capabilities to play an increasingly leading role in ... a market, like the European one, that sees strong consolidation trends," Nexi boss Paolo Bertoluzzo, who will head the new group, said in a statement.

The payments sector has seen a wave of mergers and acquisitions.

This year France's Worldline <WLN.PA> agreed to buy peer Ingenico in a 7.8 billion euro deal that will create the fourth-biggest payments company in the world.

Italy's digital payments market, which lags that of other European countries, is expected to expand rapidly with the COVID-19 crisis acting as a catalyst.

The all-share deal gives SIA an equity value of 4.6 billion euros and will hand Nexi about 70% of the merged company.

Nexi's private equity owners Advent, Bain Capital and Clessidra will have 23% of the new group.

With a market value of more than 15 billion euros, the new group will be a leader in continental Europe with around 120 million cards managed and handling payments for roughly 2 million merchants.

It will process more than 21 billion transactions a year, the companies said.

The merger, the second biggest private equity-backed deal of 2020, is expected to complete by the summer of 2021, subject to some conditions.

The new group will have a pro-forma adjusted core profit of 1 billion euros, with fully-phased recurring cash synergies estimated at around 150 million euros and one-off capex synergies at 65 million euros.

Nexi is focused on the Italian market, while SIA generates a third of its revenue abroad. SIA's biggest domestic client is UniCredit and a recent accord to renew their partnership removed a major hurdle for the deal with Nexi.

Nexi was advised by Bank of America, Mediobanca and HSBC while JPMorgan and Rothschild represented Sia.

Intesa Sanpaolo and Nomura advised Nexi’s top investor Mercury UK Holding, which is the investment vehicle of Bain and Advent.

(Additional reporting by Aishwarya Nair in Bengaluru; editing by Valentina Za and Jason Neely)