Mediobanca (Nexi’s advisor) blesses the Nexi-Sia wedding
How Mediobanca pampers Nexi's wedding with Sia. Facts, numbers, rumors, reports and scenarios
Merger with Sia at the gates and the government's plan on cash back make Nexi take off on the Stock Exchange, according to Radiocor : the stock rises by 5.02% to 16.105 euros after a maximum of 16.2 euros, a level it hadn't seen since July 8 last.
To push purchases – according to the press agency of the Sole 24 Ore group – there are the advances of the Sole 24 Ore on the plan to favor the use of cards and disadvantage that of cash: there is talk of a bonus of 300 euros year for expenses of 3 thousand euros without cash. The benefits would be extended to all types of expenditure and the only ones excluded should be those online.
The other factor that has excited the stock market on Nexi's stock are the rumors concerning Sia (a candidate to merge with Nexi for a national sample invoked by institutions and politics): the company that gravitates to the Cdp group (which has about 25% ), according to Bloomberg , would be finalizing a new agreement on the id processing contract with Unicredit which, according to Equita, is the main customer of the company with a weight on turnover of more than 20%.
In 2016 Sia had acquired for 500 million euros the processing of approximately 13.5 million payment cards and the management of 206 thousand Pos terminals and 12 thousand Atm in Italy, Germany and Austria from Unicredit (the acquired company, P4Cards, reported in 2017 revenues of 135 million and an operating margin of 39 million euros) by signing a 10-year outsourcing contract whose conditions, according to rumors , could be revised after 5 years, therefore in 2021.
“Nexi and Sia are nearing an agreement on the price of a potential deal, although other details of the transaction are still under discussion,” concluded sources cited by Bloomberg .
“The possible signing of a new contract with a time extension would eliminate one of the obstacles to the merger with Nexi – they write from Equita – and the operation could therefore be finalized in the coming weeks”.
The two companies have been considering a merger for more than a year, in a context in which various European payment providers are trying to increase their mass. A stronger competitor of the French Worldline SA would arise from a merger between Nexi and Sia, which in February agreed to acquire Ingenico Group SA with a deal worth 7.8 billion euros, Mf / Milano Finanza wrote .
The eventual signing of a new contract with a time extension could pave the way for Nexi and Sia to reach a preliminary agreement on a merger in the coming weeks, they added. "The extension of the contract with Unicredit is in fact a fundamental prerequisite for a potential merger with Nexi considering that starting from 2019 P4cards generated about 170 million euros in revenues, equal to 23% of consolidated turnover, and 45 million euros of operating profit ”, Mediobanca Securities specified this morning (the experts and perhaps even the loaters note that Mediobanca is Nexi's advisor).
"In our opinion, a merger between Nexi and Sia would have a strong industrial rationality and would be the best way to react to the current international competitive dynamics, as it would allow the creation of a strong national champion, securing an important financial infrastructure", observed Mediobanca which, in a simulation of the Nexi-Sia merger published in May, had hypothesized 110 million euros of synergies and an all-equity deal with a 7-17% increase in profits in 2022, depending on Sia's valuation (range 10 -14 times the ev / ebitda).
In an M&A scenario, "depending on the multiple paid for Sia and assuming that the merged entity will be valued at the same multiples adopted for our stand-alone valuation, our peer-based valuation indicates a range of 18-21 euros per share, an upside of around 40% compared to our stand-alone valuation of Nexi. As a reminder, our current Nexi target price at € 17 is discounting a merger with Sia with a probability of 50%, increasing Nexi's valuation from 14.2 on a stand alone basis to € 17, ”Mediobanca concluded.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/innovazione/mediobanca-advisor-di-nexi-benedice-le-nozze-nexi-sia/ on Thu, 10 Sep 2020 13:00:16 +0000.