Worldline in exclusive talks for Credem's shop payments business

Banco di Desio e della Brianza

04/06/2024 10:23

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      Shares in Wordline drop, underperforming CAC40
    

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      Worldline outbid Nexi in Credem's tender
    

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      Business valued at up to 120 mln euros-source
    

  
       MILAN, June 4 (Reuters) - Credem  EMBI.MI  has picked
France's Worldline  WLN.PA  as the preferred bidder to buy its
business to handle payment services for shopowners, the Italian
bank said on Tuesday, after running a tender that involved the
sector's main players.
    This is the latest sale of a bank's 'merchant book', meaning
contracts with retailers to process electronic payments in
shops. Banks have been offloading them as advances in technology
required growing investments.
    Like many other such deals in Europe, Credem's tender pitted
Paris-based Worldline against Nexi  NEXII.MI , Italy's market
leader and Europe's biggest payments group by transaction
volumes.
    Nexi already partners with Credem, a mid-sized bank with 68
billion euros in assets.
    Worldline outbid Nexi by valuing Credem's business at up to
around 120 million euros ($131 million), when including any
deferred payments based on set conditions, giving a double-digit
multiple to core profit, a person with knowledge of the matter
said. Wordline declined to comment.
    As Credem's current provider, Nexi would pose no switchover
risks, a fact which normally allows a bidder to offer less. 
    A newcomer also faces the danger of losing customers to
their existing supplier, which would normally offer discounts to
retain merchants, succeeding on average in keeping at least a
quarter of them, based on Nexi's track record. 
    Nexi, whose main shareholders are private equity funds as
well as Italian state agency CDP, has bought the merchant books
of several Italian banks since 2017, including a landmark 1
billion euro deal in 2019 with Intesa Sanpaolo  ISP.MI .
    On average, these transactions have valued such businesses
just below 11 times the core earnings they generated.
    To challenge Nexi's dominance, Worldline  WLN.PA  has
traditionally bid more aggressively, valuing at some 20 times
their core profit the merchant books it acquired in Italy, from
lenders such as Banco di Desio e della Brianza  DESI.MI  and the
Italian arm of BNP Paribas  BNPP.PA .
    Shares in Worldline fell 5% by 0900 GMT, against a 0.8% dip
in France's CAC40 equity index  .FCHI .
    While the entire payments sector has come under pressure
after a post-pandemic boom ran out of steam and competition
mounted, Worldline's woes have been compounded by a decision to
drop risky clients after a supervisory clampdown in Germany. 
($1 = 0.9184 euros)

 (Reporting by Valentina Za
Editing by Keith Weir)
 ((valentina.za@thomsonreuters.com; +39 02 6612 9526;))