(Reuters) – French payments group Worldline saw its shares fall to a record low on Friday after the dismissal of its chief executive, Gilles Grapinet, and a third profit warning in a year.

Down 18% by 1030 GMT, the stock has lost about 92% of its value from its peak in July 2021, at the height of investor enthusiasm for European payments companies.

Deputy CEO Marc-Henri Desportes will replace Gilles Grapinet, who has been CEO for over 11 years, from September 30 for an interim period.

The decision to dismiss him was taken by Worldline’s board of directors, group spokeswoman Hélène Carlander said, adding that the aim was to prepare “a new strategic step for the company.”

Worldline shares had soared during the Covid-19 pandemic as investors flocked to European payments companies, attracted by their rapid growth driven by customers’ shift away from cash and industry consolidation.

Their appreciation of these companies, including Worldline and Italy’s Nexi, has however deteriorated due to disappointing results. Worldline’s share price lost more than half of its value in October 2023 after a downward revision of its financial targets, sending shockwaves through the sector.

“The CEO change was driven by the third outlook cut in a year, as many investors are calling for a change in governance,” said analyst Hannes Leitner (Jefferies), adding that investors expect the new CEO to “generate organic growth.”

Worldline’s largest shareholder with 10.5% at the end of June 2024, SIX Group told Reuters on Friday that Worldline was “of strategic importance”. The Zurich-based group, which operates the Swiss stock exchange, said it had no plans to sell and supported the interim CEO.

In a letter published last December, activist investor Bluebell urged the group to reorganize its governance amid rumors of a potential hostile takeover of the group. Reuters reported in January that Worldline had appointed advisers to develop a defense strategy against a potential takeover.

Bluebell partner Giuseppe Bivona said Friday he was pleased that Worldline had reshuffled its management by removing its chief executive, but he would have preferred the changes to be made sooner “to avoid finding ourselves in the current situation in terms of operating results and valuation.”

DOWNWARD REVISION

Worldline has also revised its revenue, adjusted EBITDA and cash flow targets downwards for 2024. Revenue is now expected to grow organically by 1%, adjusted EBITDA at €1.1 billion and cash flow at €0.2 billion.

Hedge funds have probably benefited from the fall in Worldline shares.

Funds and asset managers including Greenvale Capital, Blackrock and Systematica all held short positions in Worldline as of Aug. 30, according to data platform Breakout Point. Greenvale Capital recently reduced its position, according to Breakout Point. The funds did not immediately respond to Reuters’ requests for comment.

“During the summer, Worldline experienced a slowdown in activity, as well as specific underperformance in its Pacific region activities and in certain verticals of the global online business,” the company said in a statement.

Contacted by Reuters, the group declined to comment further on its difficulties.

Worldline had already lowered its outlook for fiscal 2024 in August, saying domestic consumption trends in Europe were declining and a rapid recovery remained uncertain.

(Reporting by Alban Kacher, Pauline Foret, Tommy Reggiori Wilkes and Neil Mackenzie; Florence Loève, edited by)

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