Nexi, Italy’s largest payments firm, has dealt with its rival SIA to create digital payments with a market cap of $17.6 billion (15 billion euros), as it’s estimated that the new entity will take a domestic market share of 70%.
On October 5, it has been reported by Reuters that the all-share agreement will give Nexi around 70% of the newly merged company, with SIA having an equity value of $5.4 billion (4.6 billion euros).
However, Nexi’s private equity owners Advent, Bain Capital and Clessidra will own 23% of the newly created fintech group.
On the eve of the deal’s finalization, the Financial Times had characterized the merger as heralding the potential creation of “one of Europe’s largest fintech groups.”
Previously, it was reported on Nexi that was involved in a major pilot for a blockchain-powered interbank system in Italy back in 2018, as Nexi is focused on the Italian market, whereas SIA has generated a third of its revenue overseas.
Both Nexi and SIA are based in Milan, and talks are reported to have taken over 18 months, beset by lingering indecision over governance terms and valuations.
Paolo Bertoluzzo, the CEO of Nexi, said in an official statement that the merger will create “a large Italian PayTech company leader in Europe […] with scale and capabilities to play an increasingly leading role in Italy and at an international level in a market, like the European one, that sees strong consolidation trends.”
Likewise, Reuters reported that the COVID-19 pandemic is expected to prompt a surge in digital payments in Italy, which has until now trailed other European countries in transitioning away from cash.
As per the report, the merged entity, with Bertoluzzo remaining as CEO General Manager, will handle payments for roughly 2 million merchants and 120 million cards: over 21 billion transactions per year. Subject to certain conditions, the merger is set to be completed by the summer of 2021.
Also, in merger negotiations, Bank of America, Mediobanca, and HSBC acted as advisors for Nexi, with JPMorgan and Rothschild representing SIA.
It has been analyzed that this year, consolidation in the digital payments sector has been strengthening.
Thus, in February, French fintechs Ingenico and Worldline merged to create the world’s fourth-largest payments firm.