Merchant e-Solutions, on block since autumn, struggles to find buyer

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Merchant e-Solutions, Cielo SA, private equity, merger, M&A
Photo of contactless payment made with mobile phone courtesy of Extreme Media/iStock/Getty Images
  • Cielo paid $670 mln for MeS in 2012
  • Cielo is one of Brazil’s largest credit card processors
  • Francisco in April led investor group to buy Verifone

Payments companies may be hot, but months after going up for sale, Cielo SA has yet to announce a buyer for Merchant e-Solutions.

Cielo put MeS on the block last fall, seeking $500 million to $750 million, Buyouts reported. Goldman Sachs is advising on the process, the story said.

The auction was expected to attract private equity and strategics. But many potential buyers, including Elavon and North American Bancard, have dropped out, several sources said.

The deal process for Merchant e-Solutions “is on life support,” one GP said.

Goldman is retrading the deal, meaning it is looking to renegotiate the price, a different source said. This happened after NAB backed away, sources said. NAB is a portfolio company of Blackstone Group.

Paya, the former Sage Payments that GTCR acquired last year, may be back in the mix, sources said.

It’s unclear why Cielo has been unable to find a buyer. A separate GP source said Cielo has been very aggressive on price.

Merchant e-Solutions was founded in 2000 by former execs of BA Merchant Services, a unit of Bank of America. MeS processes more than $17 billion in annual transaction volume, its website said.

Cielo, Sao Paulo, is one of the largest credit-card processors in Brazil. The company paid $670 million for Merchant e-Solutions in 2012. Trident Capital, a VC firm, was one of the sellers. Cielo is controlled by Banco do Brasil and Bradesco.

The prolonged auction comes as payments companies are attracting big prices, especially from PE firms.

Francisco Partners in April said it was leading an investor group to buy Verifone for $3.4 billion. In 2017, Hellman & Friedman acquired Nets for $5.3 billion, while Blackstone and CVC bought Paysafe for $3.9 billion. Paysafe this month scooped up iPayment.

Executives for Goldman, GTCR, Cielo, Elavon and Blackstone declined comment.

Action Item: Call Marcelo Bernal, MeS’s interim co-CEO, at +1 866-663-6132