Ingenico on takeover radar amid Europe fintech Frenzy

Bloomberg

Private equity firms are setting their sights on French payments processor Ingenico Group SA as they scout the market for their next target among Europe’s hottest fintechs, according to people with knowledge of the matter.
The Paris-based company, with a market value of about 4.73 billion euros ($5.5 billion), is drawing preliminary interest from several buyout firms, some of which are discussing the feasibility of taking it private, the people said, declining to be identified as the deliberations are confidential. Potential suitors include CVC Capital Partners, Hellman & Friedman and Bain Capital, as well as rival fintech companies, they said. The company is in talks with advisers about preparing for a potential offer, they said.
Ingenico shares rose as much as 7.7 percent to 80.60 euros in Paris on Tuesday. Representatives for Ingenico, CVC and Bain declined to comment. Spokesmen for H&F didn’t respond to requests for comment.
While a takeover of Ingenico might appear inevitable following the recent string of deals in the electronic payments sector, potential interference by the French government — which has interceded once before — is acting as a deterrent to some suitors, the people said. When the US’s Danaher Corp. offered to buy Ingenico for 1.44 billion euros in December 2010, the French government described it as a “strategic” company essential to the economy, sending a strong signal that it might block the transaction.

VALUATION CONCERN
The valuation of the business may also be an impediment for a deal now, people said, with the stock trading at a slight premium to peers in terms of enterprise value. Still, while the stock briefly soared to a record 127.60 euros in August 2015, for the last two years it has largely traded closer to 82 euros on average, and in February plummeted 16 percent in a single day after its 2018 guidance disappointed the market.
Ingenico’s CEO Philippe Lazare has signaled that his company is more predator than prey, and plans to keep the firm independent while scouting for small takeovers. The firm, which spent 1.5 billion euros last year to buy Sweden’s Bambora in the biggest acquisition in its history, this year lost out to Atos SE’s Worldline division in a bidding war for Swiss stock market
operator SIX Group AG’s payments unit.
The European tech scene, which has seen few initial public offerings since the heyday of the dot-com boom two decades ago, is suddenly enjoying a dose of euphoria. That’s partly because investors are seeking alternatives to traditional European banks, many of which are still struggling to find their footing a decade after the financial crisis.
A few weeks after Worldline agreed to pay 2.3 billion euros for SIX’s payments unit, Danish payment firm Nets A/S — itself acquired by a group of investors led by H&F in February — agreed to combine operations with Concardis Payment Group. (Nets was also among those that lost out on the SIX business.) Last month, PayPal Holdings Inc. acquired Swedish payments processor iZettle for $2.2 billion.
Meanwhile, the UK’s Paysafe Group Plc was acquired by Blackstone Group LP and CVC at the end of last year in a deal that valued it about 3 billion pounds ($4 billion). Just as that deal was completed, an unexpected turn of events saw Atos’s unsolicited $5.1 billion offer for security software maker and payments processing company Gemalto NV being trumped, within days, by aerospace specialist Thales SA.