Worldline is buying solutions provider Ingenico for $8.6 billion
Worldline, a processor and payments solution provider, announced plans to acquire Ingenico, a fellow solutions provider that is well-established in the point-of-sale (POS) technology industry. The transaction will be a cash and share deal that values Ingenico at €7.8 billion ($8.6 billion), per TechCrunch.
The move lends credence to the idea that Worldline is interested in building up its business and capabilities through acquisition, considering it also announced plans to buy the payments segment of payment service provider SIX for €2.3 billion ($2.73 billion) in May 2018. The transaction between Worldline and Ingenico, which are both based in France, is expected to close during Q3 2020.
The announcement claimed the combination will create the number four player in payments services globally, as bringing in Ingenico should enable Worldline to add revenue opportunities and consolidate its business.
The release estimates that the firm will have synergies with a €250 million ($276.4 million) run rate in 2024, which may be driven by cross-selling services to existing clients and blending their offerings together for new ones. The companies called out their ability to combine online and in-store merchant services to create a "one-stop-shop" for both small and global merchants, possibly leveraging Worldline's digital solutions and Ingenico's POS tools, though both have offerings in both channels.
This should appeal to firms if it successfully packages both firms' merchant and financial services capabilities together. Considering Ingenico claims an estimated 37% of the global payment terminal market in the release, it could leverage existing relationships to bring about new revenue opportunities for the combined firm, especially since it's also bringing Worldline 1,000 new banking and acquiring relationships worldwide.
With Ingenico in tow, Worldline will have a massive base of merchants and volume to solidify its standing. The new group will provide payment services to almost 1 million merchants and 1,200 financial institutions (FI) and purchase volume acquired of €300 billion ($331.7 billion) in its home market of Europe. The release notes that Worldine and Ingenico will hold a 20% share of Europe's financial services market together, making the firm a more formidable player in the space.
The deal follows 2019's spike in major mergers and acquisitions (M&A) as payment firms are using such transactions to stay relevant amid increasing competition and digitization in the space. Last year's megadeals included Fiserv buying First Data for $22 billion, FIS acquiring Worldpay in a deal valued at $43 billion, and Global Payments bringing in TSYS for $21.5 billion.
While Worldline's acquisition of Ingenico is relatively smaller than these transactions, it likely shares the factors that led to them, including the need to compete with upstarts in various payment fields like Adyen and Square that are challenging their businesses, and the acquisitions can potentially give firms new capabilities and services that will continue to attract clients and revenue.
And as more segments of the payment industry digitize thanks to shifting consumer preferences and increased technological capabilities, these transactions may enable firms to better adapt as they'll have more tools and resources they can deploy to keep up with shifts in the industry in addition to digital competitors.