Nexi and SIA finally agree $5.3bn mega-merger

Nexi has agreed to combine with one of its domestic competitors, SIA to create one of Europe’s largest payment providers. The agreement finally marks the end of more than a year of negotiations after various government and valuation disputes almost terminated the discussions on several occasions. The combination of the two Milan-based PayTech firms adds to the ever-growing wave of consolidations across the continent’s digital payments market.

“The integration of important hi-tech groups such as SIA and Nexi, thanks to the fundamental role and support of CDP, will create one, large, Italian digital payments player, leader in Europe and boasting the highest levels of excellence for its know-how, people and capabilities of on a global level. This operation will contribute to accelerate our country on the path of digitalization towards a cashless society.” – Nicola Cordone, SIA CEO

The Deal

Value: €4.56bn (Nexi with 70% in the combination)

Announced: 5 October 2020

Anticipated completion: 2021 Summer (assuming antitrust process is completed in Phase 1)

Financial Advisors to SIA: J.P. Morgan (with additional support from Rothschild)

Financial Advisors to Nexi: BofA Securities, HSBC and Mediobanca

Rationale and Synergies:

The highly complementary PayTech group creates a new technological and digital innovation hub in Italy with a wide-ranging portfolio of best-in-class solutions and capabilities across the digital payment ecosystem that has full coverage of the payments value chain, both at a national and international level.

It is also expected that the combination will facilitate significant value creation from sizeable synergies and low execution risk. This will include an estimated €150m recurring cash synergies, of which €100m is achievable through lower operating expenses, €35m in increased operating margin due to €50m revenues synergies, and €15m of capex efficiencies. In addition to this, the new group will benefit from a one-off capex saving of €65m. The transaction is also expected to generate double-digit cash EPS accretion in 2022. A more detailed overview and explanation of these synergies is shown in the figure below:

Source: Nexi