Deadline looms for Worldline offer for Ingenico

By Robin Amlot

Worldline’s tender offer for Ingenico closes on 15 October 2020 and the results of the offer will be published by the French Financial markets authority (Autorité des marchés financiers – AMF) on 21 October 2020.

Ahead of the outcome of the tender offer, a detailed analysis of the future prospects for Worldline has been produced by Paul Kratz, equity analyst covering payments, processors & IT services of US investment bank Jefferies.

The merger of Worldline with Ingenico, assuming the deal goes through, will mark an important step change for both Worldline and the competitive environment in the European payments landscape, it would create, said Kratz, ‘a highly dominant payment services provider across a number of European markets’.

The deal expands Worldline’s footprint outside Europe thanks to Ingenico’s presence in APAC and Canada. It will also ‘lead to the creation of one of the largest payment service providers in the German market with the combined business generating >1.5x the revenues of its two closest competitors First Data and Concardis. Beyond simply creating a large acquirer in the German market, the merger with Ingenico makes Worldline into a more meaningful player in the Girocard market and builds on the acquisition of VOB-ZVD in 2017 by SPS which resulted in Worldline gaining a foothold in the market’.

The combined group will be the largest Girocard network service provider in Germany with a market share around 40%. It will also account for more than 45% of the credit card and international debit segment. “…the combined entities’ market position is underpinned by the distribution agreement with the Sparkasse allowing Worldline to use one of the largest banking networks in Germany as a distribution platform for acquiring services.”

Kratz describes the merger as ‘transformative’ for Worldline, closing gaps in business areas ‘where Worldline was sub-scale scale (e.g., e-commerce, DACH region), while also reinforcing its market position in key markets incl. France and the BeNeLux region’.

“From a revenue standpoint, the deal will also re-shape Worldline’s Merchant Services exposure with the combined entity generating the majority of its revenues from the DACH region, with Germany and Switzerland being the largest standalone contributors to the group.

“While the merger with Ingenico invariably increases Worldline’s exposure to the higher growth e-commerce segment, the European card present market remains an important part of the combined entity’s business mix accounting for ~70% of its merchant services business in addition to indirect exposure via the financial services business. In the context of the European card present market, the merger marks an important step change in the card present market creating for the first time a player with a highly dominant market position across a number of markets in Europe.”