Nexi, SIA Said to Intensify Discussions on Payments Merger

(Bloomberg) -- Italy’s Nexi SpA and SIA SpA are intensifying talks about a potential merger that would create one of Europe’s biggest payments providers, people with knowledge of the matter said.

The two companies, which have been weighing the idea of a combination on and off for more than a year, recently resumed discussions about a deal, according to the people. Executives have met in the past few weeks and asked their advisers to examine potential synergies as well as determine a valuation for SIA, the people said, asking not to be identified because the information is private.

Shares of Nexi jumped as much as 6.9% Thursday. They were up 6.1% at 12:38 p.m. in Milan, giving the company a market value of about $10 billion.

“A merger with SIA would be strategically positive for Nexi as it would allow the company to strengthen its business position,” Jacopo Ceccatelli, chief executive officer of Italian broker-dealer Marzotto SIM SpA, said by phone Thursday. “A deal would generate important cost synergies by integrating Sia’s prcessing services into Nexi.”

Though deliberations are still at an early stage, Nexi and SIA management plan to meet again in the near future, the people said. The parties aim to decide soon on the merits of a merger and whether they want to proceed with more detailed negotiations, according to the people.

Dealmaking Spree

SIA, which is mainly owned by the Italian government, counts Nexi and UniCredit SpA among its biggest customers. European payments providers have been seeking to bulk up to better compete with U.S. rivals like Fiserv Inc., which bought First Data Corp. last year and now has a market value of about $70 billion.

The industry has been one of the most active sectors in M&A globally as firms are seeking to boost scale and keep pace with technological changes in the world of payments. France’s Worldline SA agreed in February to acquire Ingenico Group SA in a 7.8 billion-euro ($8.6 billion) deal.

Nexi raised $2.3 billion in Europe’s biggest IPO last year, according to data compiled by Bloomberg. In February, SIA’s board approved a plan for its own listing. The company is still considering an IPO and hasn’t decided yet which path to pursue, the people said.

No final decisions have been made, and talks between Nexi and SIA could still fall apart, the people said. Representatives for Nexi and SIA declined to comment.

SIA Valuation

Nexi CEO Paolo Bertoluzzo said this month that “conversations are happening” with SIA. Nothing has been agreed or signed “at this stage” and there’s “no new relevant news to report,” he said on a May 12 conference call with analysts.

One sticking point to a transaction would be SIA’s valuation, which could be affected by uncertainty over a key customer contract, according to the people. UniCredit signed an outsourcing agreement with SIA when it agreed to sell some of its card-processing operations to the company in 2016. The terms of that agreement can be renegotiated starting next year, the people said.

A spokesman for UniCredit declined to comment on the contract.

©2020 Bloomberg L.P.

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