(News Bulletin 247) – The payments specialist is buoyed by the potential sale of the Dubai-based company Network International. The operation could materialize with a generous premium compared to the stock market price.

In the payments sector, it often happens that a related transaction can boost the stock price of the major players. If applicable this Monday with Worldline. The former subsidiary of Atos is moving up more than 3.4%, around 3 p.m., signing the strongest increase in the CAC 40, after reaching a peak of +5%. The company run by Gilles Grapinet is not the only one to react since its Italian comparable Nexi advances by 2.7% in Milan.

The sector is buoyed by the announcement of the Dubai company Network International. Founded in 1994, this company from the United Arab Emirates provides payment services in the Middle East and Africa in around fifty countries. It is listed on the London Stock Exchange and also won nearly 19% on Monday on the London market, at 360 pence per share.

A bonus of 60%

This group of payments had indicated last Thursday to conduct discussions for a potential takeover by the funds CVC Capital Partners and Francisco Partners Funds. On Monday, the company clarified that the proposal submitted by this consortium valued it at 387 pence per share, a price that its board of directors deemed satisfactory.

This amount reveals a generous bounty on the target. Before Network International indicated the status of discussions with the two funds, its share price was around 240 pence. Buyers are therefore prepared to agree to a premium of 60% over this price. Although it should be noted that the action Network International evolved above 400 pence two years ago.

“This generous bonus underlines the weakness of the valuation of the payments sector and wakes up the prices of Worldline and Nexi”, estimates an analyst.

Market fears

Traditional players in the payments sector have suffered since the second half of 2021 from a major derating movement (a depreciation of valuation multiples). Clearly, the idea that these traditional groups were going to face increasingly fierce competition from recent and innovative players (the Dutch Adyen, the American Stripe) has imposed itself in the minds of investors.

The market thus feared that these “historic” groups would lose market share and thus see their growth collapse. But “it never happened, and didn’t check out the numbers when a company like Stripe isn’t even profitable at Ebitda level. [le résultat brut d’exploitation, NDLR]”, continues the previously quoted analyst.

In November Stripe was forced to announce around 1,000 job cuts, corresponding to around 14% of its workforce. The Collison brothers, founders of the company, admitted then that they had been too optimistic about macroeconomic conditions.

For its part, Worldline generated a profit of 300 million euros last year, while its growth was 10.7% on a like-for-like basis.