Nexi, SIA Close to Clearing Hurdle to Blockbuster Merger

Italy’s Nexi SpA and SIA SpA are close to clearing a major hurdle to a potential merger that would create one of Europe’s biggest payments providers, people familiar with the matter said.

SIA is finalizing an accord to keep Italian lender UniCredit SpA as one of its main clients, a key sticking point in determining its valuation, according to the people. Extending the contract could pave the way for Nexi and SIA to reach a preliminary agreement in the next few weeks, they said, asking not to be identified because the information is private.

Nexi rose as much as 6% in Milan trading at was up 4.1% as of 9:32 a.m. The stock has gained almost 30% this year, giving the company a market value of 10.1 billion euros ($12 billion.)

The companies have been weighing a combination on and off for more than a year as payments providers across Europe look for deals that can add scale. Combining the two Italian firms would create a stronger competitor to France’s Worldline SA, which agreed in February to acquire Ingenico Group SA in a 7.8 billion-euro deal.

While Nexi and SIA are moving closer to an agreement on the pricing, other terms of a transaction are still under discussion and talks could drag on longer or fall apart, according to the people. The specifics of a new UniCredit contract with SIA will play a vital role in determining the payments company’s valuation, the people said.

UniCredit signed an outsourcing accord with SIA when it agreed to sell some of its card-processing operations to the company in 2016. The bank, which will have the right to withdraw from the agreement starting next year, expressed concerns over some clauses and that led to talks to re-negotiate the contract, people familiar with the matter have said. An accord may be finalized in next few weeks, they said.

SIA, which is mainly owned by the Italian government, counts Nexi and UniCredit among its biggest customers. In February, SIA’s board approved a plan for its own listing, after Nexi raised $2.3 billion in Europe’s biggest IPO last year.

Representatives for Nexi, UniCredit, SIA and SIA’s controlling shareholder, state-owned Cassa Depositi e Prestiti SpA, declined to comment.

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