Worldline to join forces with Equens to strengthen its pan-European leadership in payment services 

• A transformational deal for Worldline, providing the enlarged Worldline Group a highly comprehensive pan-European footprint, with leading positions and offerings in key geographies (France, Belgium, the Netherlands, Germany, Italy, the Nordics).
• A transaction structured in two components:
  • An asset/share deal in Financial Processing, by merging the processing activities of the two companies in Europe to create “Equens Worldline Company”, to be owned 63.6% by Worldline and 36.4% by the current Equens shareholders;
  • A deal in cash in Commercial Acquiring, where Worldline will acquire 100% of PaySquare from Equens for € 72 million.
• Transaction expected to be accretive to EPS as soon as 2018, thanks to a minimum c. € 40 million of run-rate synergies expected in 2018, half of which in 2017.
• Closing expected in the course of Q2 2016.

Worldline announced today that it has reached an agreement with Equens on a transaction structured in two components, which will reinforce the Worldline Group payment service industry leadership, with pro forma 2015 revenue increasing by c. € 305 million to exceed € 1.5 billion.

Equens is a prominent European payment services provider, headquartered in Utrecht, Netherlands, with estimated c. € 305 million 2015 revenue[1]. Equens shareholders are ABN Amro Bank, ING Bank, Rabobank (Netherlands), DZ Bank (Germany) and ICBPI (Italy). It provides financial processing services to approximately 50 financial institutions and commercial acquiring services to 120,000 merchants in 4 key countries through its subsidiary PaySquare. Equens has 1300 employees and generates a 2015 pro forma OMDA of c. € 37 million.

The transaction announced today represents a transformational step for Worldline, fully in line with the strategy presented at the time of its IPO. For its Financial Processing division, merging with Equens represents a major industrial combination, significantly expanding its positions in the Netherlands, Germany and Italy, while providing growth opportunities in the Nordics. It is also a perfect fit in terms of product portfolio, with leading positions of Equens in non-card payment complementing Worldline recognized strong offers in card-based payment and in highly innovative e-commerce and mobile payment services.

Gilles Grapinet, Worldline CEO, said: “This industrial transaction with Equens is a decisive step reflecting our strategic ambition to be one of the leading consolidators of payments in Europe. It will provide an opportunity to join forces with  highly experienced payment experts from Equens and to share, within our enlarged group, a common future. I am particularly pleased that Michael Steinbach, Equens CEO, will lead our new financial processing champion, “Equens Worldline Company”. From a shareholders’ perspective, this combination will provide significant value creation through the realization of considerable synergies, while preserving our strong financial flexibility. This merger will also allow us to provide to our respective customers even more efficient, reliable and highly innovative payment services.”

New Worldline Group profile at closing

 

 

* 2015 unaudited pro forma figure, net of interchange fees and adjusted for renewed contract terms with key Equens’ shareholders

Main terms of the transaction

Under the terms of the agreement, the transaction is made of two components:

In Commercial Acquiring: acquisition of PaySquare in cash

Worldline has agreed with Equens to acquire its commercial acquiring subsidiary PaySquare for € 72 million in cash, corresponding approximately to 12.5 times 2015 estimated EBITDA. The PaySquare business will be integrated in Worldline Merchant Services & Terminals Global Business Line.

In Financial Processing: creation of Equens Worldline Company

Creation of the Equens Worldline Company, by merging the Financial Processing businesses of Worldline[2] with Equens and to be owned by Worldline at 63.6%:

•  Equens Worldline Company will become the largest pan-European financial processor, targeting 2016 revenue of c. € 700 million and OMDA of c. € 120 million, managing approximatively 100 million payment cards and employing 3,000 experts in payment.
• Worldline will receive 63.6% of newly created Equens shares in exchange of the merger of its current Financial and Acquiring processing activities in Germany, France and Benelux with the corresponding Equens processing activities. The current Equens shareholders will hold the remaining 36.4%.
• Under the shareholders’ agreement, from 2017, Worldline will benefit notably from pre-emptive rights in case a minority shareholder of Equens Worldline Company decides to sell its stake and also from a call option exercisable in cash or in shares earliest in 2019 on all the shares owned by minority shareholders.
• Equens Worldline Company will benefit from the combination of the two experienced international management teams from Equens and Worldline FPL Global Service Line, thus ensuring a strong execution of the jointly established industrial and synergy plan. Mr. Michael Steinbach, current CEO of Equens, will be appointed as CEO of the Equens Worldline Company.
• A very detailed industrial project will be implemented, with significant synergies of minimum c. € 40 million expected to be reached in 2018[3], half of which as soon as 2017, based on cost rationalization notably in infrastructure, G&A expense, procurement and real estate, as well as revenue expansion through complementary and highly innovative offerings.
• An application platforms convergence roadmap, to be engaged together with our key clients, will progressively generate additional cost saving opportunities up to c. € 15 million per year by 2021[4], amount and timing to be synchronized with each key Equens clients migration phasing.
• As part of this transaction, ABN Amro Bank, DZ Bank, ICBPI, ING Bank and Rabobank have committed to renew at closing their commercial contract for an additional 5-year period, which will represent a backlog of c. € 1 billion.

Michael Steinbach, Equens CEO, said: “Joining forces with Worldline and creating the new entity, Equens Worldline Company, is a major milestone in consolidating the European payments market. This step follows consequently the proven strategy of Equens since our foundation in 2006, with a truly pan-European processing payment service provider, to maximize economies of scale and scope, and with that actively supporting the development of an integrated European payments market. Because of the complementarity of the service portfolios of Worldline and Equens, current clients from both companies will substantially benefit in terms of an enlarged, state-of-the-art product portfolio and time-to-market. Based on that, Equens Worldline Company will create new and innovative business opportunities. I am very excited about this joint future with a highly respected innovative company in the payments market and look forward to the promising future of the new Equens Worldline Company.“

Transaction benefits for Worldline

Post-transaction, the enlarged Worldline group will benefit from the two components of this strategic combination with:

•  Significant reinforcement of its market positions both in Financial Processing and Commercial Acquiring:
  • In Financial Processing, through the newly established Equens Worldline Company, Worldline Group will strengthen its European leadership in card-based payment services and will benefit from Equens’ expertise in SEPA mass-payment systems and Automated Clearing House (ACH). With Financial Processing revenue increasing by c. 65% and with an enlarged geographic reach, the Group will accelerate its ability to cross-sell its value added services in 5 key European markets (France, Belgium, Germany, Italy, The Netherlands).
  • In Commercial Acquiring, revenue will increase by c. 25% and the Group will benefit from PaySquare strong positions in merchant services in Benelux and in cross-border acquiring (The Netherlands, Belgium, Germany, Poland…), resulting in more integrated and comprehensive omni-channel offers;
• Additional expertise from 1,300 electronic payment experts from Equens joining the Worldline group;
• Ambitious R&D activities to accelerate innovation and better support customers’ time to market and digital transformation;
• Even stronger reliability, robustness and security for processing services thanks to scalability and furtherindustrialization of its platforms and solutions;
• New economies of scale and significant additional levers to generate synergies on top of the TEAM program toaccelerate OMDA and free cash flow growth.

Value creation

Strong value creation will be delivered thanks to the synergy plan and the transaction is expected to be accretive to EPS in 2018. The transaction is also expected to be accretive to EPS before synergy implementation costs in 2017.

In case of exercise by Worldline of its call option in cash to buy-out the minority shareholders in Equens Worldline Company, accretion to EPS is expected up to 20%.

Financial flexibility

This transaction will result in a total estimated cash out of c. € 84 million (transaction and reorganization costs included), financed by available cash. Post-closing, the Group will keep a solid net cash position.

Timing of the transaction

The transaction is expected to close during the second quarter of 2016, after the projected reorganization of the contributed businesses, and is subject to work councils’ information and consultation processes in Worldline and Equens, as well as regulatory and antitrust authorities’ approvals.

Source: Worldline

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