U.S. payments industry watchers had a ringside seat to some big M&A deals in 2019. Now there is some early action across the pond as Worldline and Ingenico, both based in France, have announced they will become one.
While this nearly $9 billion deal pales in comparison to last year’s Fiserv-First Data ($22 billion) and FIS-Worldpay ($35 billion), it nonetheless represents a sizable acquisition. At first glance, Worldline-Ingenico appears to be synergistic, especially given that both companies have mostly been at different ends of the payments value chain. Ingenico’s mega customer base of merchants and POS expertise give Worldline a more vertically integrated offering.
Worldline is not exactly a household name in the North American payments landscape. But the company is well positioned in Europe, South America, and Asia. Worldline is also a prolific deal-maker and has significantly grown in size over several years. The Ingenico acquisition gives Worldline a beachhead in the U.S. and is another example of a consolidation deal within the payments industry. For 2020, it won’t be the last.
A TechCrunch article, excerpted below, discusses more on the topic.
Some consolidation is afoot among the payments behemoths of Europe. Smaller, newer fintech companies are eating into their market dominance by adapting faster to changing spending habits, while also looking to capitalize on economies of scale.
Today Worldline, a financial services company that provides everything from in-store point-of-sale terminals through to online payments, data analytics, banking and fraud protection, announced that it would acquire Ingenico, the huge point-of-sale terminal provider that controls 37 percent of the market globally, in a cash and share deal that gives Ingenico a valuation of €7.8 billion ($8.6 billion at today’s exchange rates).
The deal underscores two big themes in fintech, and specifically payments. The first is that the shift in payments and spending habits to more digital platforms has meant an increasing amount of fragmentation in the payments space, with each player getting a cut of the transaction: this means that a company doing business in this area needs economy of scale in order to make decent returns. The deal will give both companies a lot more economy of scale.
Overview by Raymond Pucci, Director, Merchant Services at Mercator Advisory Group
