Worldline and Equens are getting married. Equens is a prominent European payment services provider, headquartered in Utrecht, Netherlands, with €305 million 2015 revenue. Equens Worldline Company will become the largest pan-European financial processor, targeting 2016 revenue of € 700 million and OMDA of € 120 million, managing approximatively 100 million payment cards and employing 3,000 experts in payment.
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 € 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.
• 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, 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, 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.
◦ 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 further industrialization of its platforms and solutions;
• New economies of scale and significant additional levers to generate synergies on top of the TEAM program to accelerate OMDA and free cash flow growth.
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.
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.
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