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A sharp share price decline at Ingenico [EPA:ING] is likely to attract takeover interest from bidders such as Atos [EPA:ATO] and Wirecard [ETR:WD] as the payments market continues to consolidate, industry bankers said.

Ingenico is seen as vulnerable, said a first banker familiar with the industry. Strategic investors and funds are circling the asset, this banker said.

Everyone in the sector is talking to each other at the moment, a second banker familiar said. The industry is looking for consolidation, as industry participants recognise the need for a large and truly global platform to be competitive, this banker said.

Ingenico “is not at a high enough level” to compete with rivals, the second sector banker said. The fate of digital security and services provider Gemalto [AMS:GTO], which is being taken over by Thales [EPA:HO] after a string of profit warnings, is a signal Ingenico needs to do something, he added. Gemalto initially resisted a EUR 4.3bn offer from Atos before agreeing to a takeover by Thales towards the end of last year.

Atos is now likely to be considering an offer for Ingenico through its listed Worldline [EPA:WLN] subsidiary, a person at a rival company believed.

A minority investor in Ingenico believed takeover talk was premature but conceded that Atos would be the most likely to bid if a sale process were to emerge.

Rumours of a EUR 7.5bn to EUR 8bn tie-up between Atos and Ingenico, structured through Atos’ Worldine subsidiary, were denied early in 2017 by Atos. Ingenco’s stock price has declined 30% since then. Ingenico's shares are currently trading at EUR 64.50 from around EUR 92.00 prior to the publication of disappointing FY17 results in February.

It makes sense for Wordline to acquire Ingenico as it would help it gain a stronger foothold in its core European markets, two sector bankers said. Ingenico, however, does not have the same amount of technology as Gemalto, one of them said.

A deal could also see Atos team up with Worldpay [NYSE:WP], dividing the assets between them, a third sector banker said. Alternatively, either Atos or Worldpay could buy all of Ingenico and sell off assets to another player at a later stage, this banker said.

In another scenario, German payment company Wirecard could acquire Ingenico, the second sector banker said.

Wirecard expects to see more consolidation in the payment industry with companies and funds like KKR-backed First Data [NYSE:FDC]; Worldpay, and Global Payments [NYSE:GPN] being the main consolidation players, this news service reported earlier this month.

But, Atos would be a more likely buyer than Wirecard as there would be synergies with Ingenico in hardware, whereas Wirecard is only focused on online payment, the second banker familiar said.

A tie-up between Ingenico and Wirecard has been pitched by bankers in the past, and a deal between the two companies has been mooted several times by advisers over the last six years, this news service previously reported.

Other bidders for Ingenico could include US players such as NCR [NYSE:NCR] and Verifone Systems [NYSE:PAY]; or Japan’s Hitachi [TYO:6501], Toshiba [TYO:6502] or Panasonic [TYO:6752], which are looking to expand their presence in Europe, the second banker said.

The third sector banker questioned whether foreign strategic players would target Ingenico, however, due to the development of blockchain and mobile payments, which are disrupting the payments landscape.

Private equity funds Bain and Advent, which own payment processing firm Concardis, could be among the potential bidders, a fourth banker and the second banker agreed. Should Ingenico refuse to merge with a peer it can still get a large PE fund on board supporting its strategy, the third banker noted.

Atos had a market value of EUR 11.3bn, which includes the value of its 70% stake in EUR 5.3bn-market cap Worldline, at yesterday's close (4 April). Ingenico had a market capitalisation of EUR 4.0bn and trades at an EV/EBITDA multiple of 10.1x.

Peers Verifone, NCR and Worldline trade at EV/EBITDA multiples of 9.2x, 6.3x and 16.4x, respectively. Gemalto, which competes in some areas of the payments market in which Ingenico is also active, is being bought by Thales at 11.9x 2017 EBITDA.

Ingenico's share price decline is linked to its EUR 1.5bn purchase of Swedish payment service provider Bambora last November, which was overvalued, the second and fourth bankers agreed. Ingenico’s margins have not been as high as expected and capital invested in Bambora would have been better used for other targets, the second banker added.

Ingenico has also failed to adequately diversify its services in comparison with new payment methods, especially Google Pay and Alipay in the US and China, the minority shareholder said.

Worldline completed four acquisitions of e-payment solutions providers last year. Sweden-based Digital River World Payments, Lithuania, Latvia and Estonia-based First Data Baltics, India-based MRL Posnet and its parent company’s (Atos) payment subsidiary Diamis for a total consideration of EUR 220.1m.

Ingenico CEO Philippe Lazare this week said the company is planning to be acquisitive in the digital payment space instead of becoming a target itself, according to a French press report. Targets would be smaller rather transformational acquisitions as it does not want to increase its current level of debt or dilute the current shareholders through a capital increase, the report added.

Atos and Ingenico declined to comment.