Worldline has entered into exclusive talks with the Apollo Funds on the basis of a binding offer for the purchase of its Terminals, Solutions & Services (“TSS”) business line.
Worldline agrees sale of TSS business
Following the strategic review of TSS aimed at supporting its ongoing transformation and further accelerating its development, Worldline has entered into exclusive talks with the investment funds managed by affiliates of Apollo upon receipt of a binding offer, for 100% of the shares of TSS, comprising a € 1.7 billion upfront consideration as well as preferred shares that could reach up to € 0.9 billion in value depending of the future value creation of TSS.
Worldline entered into the talks following a competitive process considering the overall quality of its offer, its strategic vision and industrial focus, its commitment to support the current TSS management and its sensitivity towards the French social context.
The contemplated transaction also encompasses the signing of a partnership agreement cementing the strategic and long-term commercial relationship between Worldline and TSS over the next 5 years.
Back in early February Worldline dominated the then red hot M&A activity with the purchase of Ingenico for €7.8 billion in cash and shares in a deal that aimed to create a European champion in a rapidly consolidating industry.
The companies said at the time that the deal would create the world’s fourth-largest payment services provider, with combined revenues of €5.3 billion in 2020 servicing almost 1 million merchants.
It brought together Worldline’s strength among merchants in its European stronghold, and Ingenico’s leadership in payments hardware, as well as its growing online commerce business, the companies said.
Alongside the Apollo Funds, Worldline will remain associated to future value creation opportunities made possible by the robustness and quality of the TSS business and the transformation plan shared between the parties via the ownership of the preferred shares.
This structure has been designed to align interests between Worldline and the Apollo Funds and will be directly linked to the total value creation achieved by TSS during its ownership by the Apollo Funds.
“As we communicated at the time of the acquisition of Ingenico in February 2020, we initiated a strategic review of our payment terminals business to ensure that it would have the best possible conditions to execute its ambitious transformation,” said Gilles Grapinet, CEO of Worldline.
“Following the validation of Worldline’s Board of Directors to divest TSS in October 2021 and after conducting a rigorous process over several months, we have signed an agreement with the candidate we believe is the best fit to ensure the takeover of the business, in the best interest of its customers and employees.
The TSS business, world leader in its space, has a very promising development potential and is supported by highly talented people under the strong leadership of Matthieu Destot. We trust Apollo can provide TSS with the best assets, expertise and support to ensure the pursuit of its successfully initiated transformation journey towards an “as-a-service” business model, reinforcing further its long-term success.
This announcement is a major milestone in the execution of Worldline’s strategy after the acquisition of Ingenico and numerous new acquisitions in 2021 in Greece, Italy and Sweden, strengthening its leadership position in payment services.
This contemplated transaction, while being fundamentally triggered by the best interest of TSS, will also simplify our group structure, further increase our focus on our core activities and massively deleverage our balance sheet allowing the acceleration of our next strategic developments towards establishing Worldline as a truly global Paytech leader.”
Deal Details
Based on the current valuation of the preferred shares, the total consideration amounts to €2.3 billion at the time of the transaction announcement.
The fair value of the preferred shares, estimated using a Black and Scholes model, will be accounted for €0.6 billion on Worldline’s balance sheet, as discussed with Worldline’s auditors as part of the preparation of the 2021 financial statements.
The fair value of the preferred shares upon completion is expected to correspond to the c.80% achievement level of TSS business plan and would reach its full value of €0.9 billion if c.90% of TSS business plan is delivered, assuming limited valuation multiple re-rating at exit.
The main impact of the disposal on Worldline’s discontinued part of its financial statements will consist in a conservative non-cash technical impairment of c.€900 million compared to TSS book value defined at Ingenico closing, pre-Covid components shortage crisis.
The completion of the transaction is also subject to the approval of relevant regulatory authorities and is expected to close in H2 2022.
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