Scandinavian payments group Nets is planning to merge with German peer Concardis in a roughly $6 billion transaction, adding to a string of deals in the rapidly consolidating industry.
The deal will create a business with 2018 earnings before interest, tax, depreciation and amortization of 500 million euros ($587 million) on revenue of 1.3 billion euros and 3,500 staff, the two private equity-backed companies said on Monday.
Usually set up by banks, payments firms have long enjoyed a cosy relationship with lenders as customers but often have lacked the funds needed to invest in technology.
Payments companies now also need scale to navigate increasing regulatory complexity, which has spurred M&A activity in the sector.
As part of the deal, Concardis’ private equity owners – Bain and Advent – will receive Nets shares for their holdings in Concardis, while Hellman & Friedman’s Nets shareholdings will be diluted.
Concardis and Nets were acquired by the private equity groups last year.
Concardis was valued at about 700 million euros ($821 million)in the January 2017 deal, sources close to the matter said at the time, while Hellman & Friedman announced the acquisition of Nets for 33.1 billion Danish crowns ($5.22 billion) last September.
Worldline (WLN.PA) bought Swiss peer SIX Payment Services in May at a post synergies valuation of 17.5 times expected 2019 EBITDA, a target which Nets had also aimed for.
“There will be more deals,” Nets Chief Executive Bo Nilsson told Reuters. “We are looking at possible targets in the Nordics, the German-speaking countries and even other geographies and expect to have financial backing for deals from our private equity owners.”
He added that the company was targeting annual capital expenditure of 100 million euros to expand the business.
“In the Nordics, 75 percent of payments are digital and 25 percent cash. In Germany, it’s still the other way around, so there is abundant scope for growth,” Nilsson said.