COPENHAGEN (Reuters) - Payments firm Nets on Monday welcomed a 33.1 billion Danish crown ($5.3 billion) bid from U.S. firm Hellman & Friedman, marking what could be one of the largest European private equity takeovers in recent years.
Nets said in July it had been approached by potential buyers as the payments industry sees a wave of deals, with consumers switching to card and mobile payments and regulatory changes promising to open up the fragmented market.
The Danish firm was taken public in Copenhagen a year ago and was valued at 30 billion crowns, or 150 crowns per share, double what Advent International, Bain Capital and Danish pension fund ATP had paid for it two years earlier.
The European payments industry is consolidating quickly and other recent takeover targets have included Worldpay and Paysafe.
Potential buyers for Nets had included both industrial players as well as private equity firms, the company’s deputy chairman, Jeff Gravenhorst, told a press conference.
Analysts had identified France’s Worldline as one industrial player that could benefit from synergies with Nets.
“We see an opportunity under private partnership to harness the expertise from the Nordic region – which is one of the most dynamic – and have the financial flexibility to examine consolidation,” Patrick Healy, Deputy Chief Executive Officer at Hellman & Friedman, told Reuters.
Hellman & Friedman’s offer of 165 crowns per share represents a 27 percent premium to Nets’ share price as of June 30, before Nets said it had been approached by potential buyers.
The price on offer from the U.S. buyout firm implies a valuation for Nets of 13 times 2018 enterprise-value-to-EBITDA, in line with the sector average, UBS wrote in a research note.
Nets shares rose 6.3 percent to 161.70 crowns on Monday.
The biggest issuer of Denmark’s most widely used debit card said shareholders representing 46 percent of its share capital had agreed to accept the offer, including Advent and Bain who still hold 39.9 percent of the shares.
The deal is set to be the third biggest European acquisition by a private equity fund during the last five years and the second biggest in 2017 so far.
A deal will require acceptance of shareholders representing 90 percent of Nets’ capital and following a deal Bain and Advent have agreed to maintain a 16 percent stake in Nets.
“We believe the offer represents attractive value to Nets’ shareholders,” Nets chairman Inge Hansen said in a statement, adding that Hellman & Friedman had approached it in June.
The offer equals a 27 percent premium to the closing price on 30 June 2017, the day before Nets confirmed it had received takeover approaches.
Deutsche Bank, Morgan Stanley and Bank of America Merrill Lynch are leading a debt financing backing the buyout and are set to be joined by other banks shortly, banking sources said.
The financing is expected to be denominated in a mixture of dollars, euros and local currency, the sources added.
Reuters earlier reported that Hellman & Friedman along with Permira [PERM.UL] and Nordic Capital had all completed due diligence on Nets.
Nets’ shares shed nearly 30 percent of their value over the six months following the listing in September last year, but jumped back close to the IPO price in early July when Nets said it had been approached by potential buyers.
JP Morgan and Nordea advised Nets. Deutsche Bank advised Hellman & Friedman.
Reporting by Jacob Gronholt-Pedersen, additional reporting by Dasha Afanasieva and Claire Ruckin in London, Thyagaraju Adinarayan and Pawel Goraj in Gdynia, Stine Jacobsen in Copenhagen; Editing by Alexander Smith and Mark Potter