Thursday, June 20, 2024

French Line Up Banks For £6bn Worldpay Bid

A French payments processing group has lined up financing from a trio of banks for a £6bn-plus all-cash takeover bid for Worldpay, its British rival.

Sky News has learnt that Ingenico Group, which is listed on the Euronext stock exchange, has secured backing from HSBC, Natixis and Societe Generale in an attempt to persuade Worldpay’s owners to abandon a planned stock market flotation. News of the financing plan comes days after it emerged that Ingenico had tabled an offer to buy Worldpay that is said to have valued it at more than £6bn.

Ingenico, which has a market value of €6.5bn (£4.8bn), is vying with rival bids from Germany’s Wirecard and a private equity consortium comprising Blackstone, Hellman & Friedman and Singapore’s Government Investment Corporation.

The bidders are trying to persuade Advent International and Bain Capital, Worldpay’s existing owners, to abort a London listing by offering the certainty of a full exit at a time of volatility in global equity markets. Analysts believe there opportunities for substantial synergies from a combination with one of Worldpay’s European competitors.

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Bankers say that a return to the level of turmoil seen at beginning of this week would oblige some companies seeking public share offerings to pursue sales or delay their plans. Advent and Bain are likely to decide during the autumn which route to take, with Worldpay set to be propelled straight into the FTSE-100 if they opt for a public listing.

Worldpay is performing strongly, with recently published unaudited results for the first half of this calendar year showing a 13% rise in underlying earnings before interest, tax, depreciation and amortisation to £182.6m. Philip Jansen, Worldpay’s chief executive, said the results reflected its “ongoing focus on investing in technology and building our business, developing new and innovative products and meeting the evolving needs of our customers to help them prosper”. 

“Our continued investment in technology and customer service is complemented by a number of new and exciting products launched during 2015. Combined with Worldpay’s global reach and capability this creates significant opportunities to continue to grow our business,” he said.

This week, Sir Mike Rake, the City grandee, took over as Worldpay’s chairman from John Allan, the new chairman of Tesco.

The looming change of ownership – whether through a sale or listing – comes roughly five years after Worldpay was sold by the bailed-out Royal Bank of Scotland (RBS) in a deal worth approximately £2bn.‎

The payments group has grown at a spectacular rate since then, with Mr Jansen, a former executive with the catering group Sodexo and MyTravel, the tour operator, spearheading the company’s growth. Specialising in the provision of secure payment services, its major corporate customers include Google and Sony.

Comparable listed companies such as Wirecard and Brazil’s Cielo usually trade at valuations worth between 14 and 20 times their annual profits. With Worldpay expected to record around £400m of pre-tax profit in 2015, a similar valuation range would attribute a price tag of between £5.6bn and £8bn to the company.

In the UK, Worldpay combines the former Streamline business with Cardsave, YESpay and Zinc, handling well over half of all card transactions. The company sees further growth opportunities in the ongoing push to open up payment systems, with a new regulator recently assuming oversight of the industry in the UK. Worldpay also owns a valuable stake in Visa Europe, which is in talks about a takeover by its US cousin, Visa Inc.

Source: Sky News

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