Nexi and Nets in exclusive talks to create EU payments powerhouse

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 deal which follows its multi-billion euro tie-up with Milan-based SIA less than a month ago.

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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, 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.

Th 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