Worldpay Auction Hots Up As French Raise Bid

A French payments processing company has raised the stakes in the battle to win control of Worldpay, its UK-based rival, by tabling a higher bid in an effort to derail a £6bn-plus stock market listing.

Sky News has learnt that Ingenico Group (Swiss: ING.SW - news) which is listed on the Euronext (Lisbon: ENX.LS - news) stock exchange, this week submitted an offer worth well over £6bn for Worldpay.

The revised bid also included a proposal for a substantial break fee which would be handed to Worldpay if the takeover was abandoned, according to a source close to Ingenico (Paris: FR0000125346 - news) .

The new proposal underlines Ingenico’s determination to merge with Worldpay and create a payments giant worth more than £11bn.

The French company’s bid was in cash, although it would require the approval of its shareholders, meaning that it would not be endorsed until towards the end of the year.

Worldpay’s shareholders are understood to be discussing the revised Ingenico bid alongside a rival offer from Wirecard (Xetra: 747206 - news) , which is comprised of cash and shares, and another from a private equity consortium led by Blackstone (NYSE: BX - news) .

Advent International and Bain Capital, the buyout firms which own Worldpay, are considering the takeover interest against the potential for an initial public offering that could be announced soon, according to City sources.

The bidders are each trying to persuade Advent International and Bain Capital, Worldpay's existing owners, to abort a London listing by offering the certainty of a full exit at a time of volatility in global equity markets.

Sky News revealed last week that Ingenico had secured backing from HSBC, Natixis (Paris: FR0000120685 - news) and Societe Generale (Swiss: 519928.SW - news) for its bid, with the French company said to be confident of securing backing from investors.

Analysts believe there opportunities for substantial synergies from a combination with one of Worldpay's European competitors.

If Advent and Bain opt instead for a public listing, Worldpay would be propelled straight into the FTSE-100 index.

The British payments group is performing strongly, with recently published unaudited results for the first half of this calendar year showing a 13% rise in underlying earnings before interest, tax, depreciation and amortisation to £182.6m.

Philip Jansen, Worldpay's chief executive, said the results reflected its "ongoing focus on investing in technology and building our business, developing new and innovative products and meeting the evolving needs of our customers to help them prosper".

"Our continued investment in technology and customer service is complemented by a number of new and exciting products launched during 2015. Combined with Worldpay’s global reach and capability this creates significant opportunities to continue to grow our business," he said.

Last week, Sir Mike Rake, the City grandee, took over as Worldpay's chairman from John Allan, the new chairman of Tesco (Xetra: 852647 - news) .

The looming change of ownership - whether through a sale or listing - comes roughly five years after Worldpay was sold by the bailed-out Royal Bank of Scotland (LSE: RBS.L - news) (RBS) in a deal worth approximately £2bn.‎

The payments group has grown at a spectacular rate since then, with Mr Jansen, a former executive with the catering group Sodexo and MyTravel, the tour operator, spearheading the company's growth.

Specialising in the provision of secure payment services, its major corporate customers include Google (Xetra: A0B7FY - news) and Sony (Hanover: SON1.HA - news) .

Comparable listed companies such as Wirecard and Brazil’s Cielo (Sao Paolo: CIEL3.SA - news) usually trade at valuations worth between 14 and 20 times their annual profits.

With Worldpay expected to record around £400m of pre-tax profit in 2015, a similar valuation range would attribute a price tag of between £5.6bn and £8bn to the company.

In the UK, Worldpay combines the former Streamline business with Cardsave, YESpay and Zinc, handling well over half of all card transactions.

The company sees further growth opportunities in the ongoing push to open up payment systems, with a new regulator recently assuming oversight of the industry in the UK.

Worldpay also owns a valuable stake in Visa Europe, which is in talks about a takeover by its US cousin, Visa Inc (Xetra: A0NC7B - news) .

Ingenico could not be reached for comment while Worldpay declined to comment.