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Italian fintechs Nexi and Sia decide to merge

D.he wave of consolidation among payment service providers in Europe continues. The Italian payment service provider Nexi announced on Monday night that it wanted to take over its domestic competitor Sia. The joint market value is put at 15 billion euros. This would make the merged company one of the largest payment service providers in Europe, with annual sales of 18.8 billion euros.

With the merger, Italy creates a national champion in the market. The aim of the new, state-controlled company is to grow in Europe. Particular attention is paid to the German market. After the demise of Wirecard, there was a gap in the market there. Italy’s media and politicians followed the collapse of the former DAX group with glee.

The state-controlled finance house Cassa Depositi e Prestiti (CDP) is to become the main shareholder of the combined company. So far, CDP has been the main shareholder in Sia, the smaller of the two merger partners. The finance house controlled 25.7 percent of the shares directly and a further 57.4 percent via a financial holding company. This direct and indirect participation of 83.1 percent will in future be converted into around 25 percent of the combined company. Deutsche Bank also held a minority stake of 2.58 percent in Sia so far.

Shareholder also controls the oil company Eni and the post office

CDP also controls other important listed Italian companies such as the Eni oil company, the network operators and the post office, and also has many minority stakes in important companies in Italy.

Nexi, on the stock exchange since March 2019, is controlled by investment funds. The largest shareholder with 43.3 percent was previously a holding company called Mercury, backed by the American funds Advent and Bain Personal-Financial.com and the Italian fund Clessidra. And Italy’s largest bank, the government-affiliated Intesa Sanpaolo, has a 10.5 percent stake in Nexi. A few months ago, the bank sold all of its customer contacts for payment services to Nexi and received shares with a volume of one billion euros.

The merger of the two French payment service providers Worldline and Ingenico, announced in February of this year, with a market value of 7.8 billion euros, could have increased the pressure on Nexi and Sia to merge. The merger in France, the two companies subsequently declared, would create the fourth largest payment service provider in the world.

The industry, in which economies of scale play an important role, is on a takeover frenzy around the world. This is particularly evident when looking at the United States. Last year alone, there were three spectacular mergers of payment providers there. In May 2019, payment service provider Global Payments announced that it was taking over Total System Services for $ 21.5 billion. Fiserv acquired payment processor First Data for $ 22 billion earlier this year. But the biggest deal in the payment processing market in 2019 was FIS and World Pay, which was valued at $ 35 billion.

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