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Worldline, [Euronext: WLN] European leader in the payments and transactional services industry and SIX, announce today that they have signed an agreement to enter into a strategic partnership where Worldline would acquire SIX Payment Services, the payment services division of SIX, for a consideration of EUR 2.303bn (CHF 2.75bn).

SIX Payment Services (SPS) is the payment services division of SIX delivering at scale, both commercial acquiring and financial processing services. SPS, historical leader in its home market in Switzerland, has also successfully executed numerous cross-border acquisitions in the past, with in particular Paylife in Austria in 2013, Cetrel in Luxembourg in 2014 and in 2017 a subsidiary of VÖB-ZVD in Germany and Aduno, its competitor in Switzerland.

SIX Payment Services, with c. EUR 530m 2019 estimated net revenue, c. 1,600 staff and 6 countries of significant direct presence, is the clear leader of the DACH[1] region, with n°1 commercial acquiring market positions in Switzerland, Austria and Luxembourg and a sizeable presence in Germany.

With 81% of its turnover in merchant services (c. EUR 430m), SIX Payment Services is one of the largest and most successful non-bank commercial acquirers in Continental Europe, servicing c. 210.000 merchants both off-line and on-line. It also has a significant scale in Financial Services, delivering c. EUR 100m revenue from financial processing services to c. 180 banks and financial institutions, in particular to the Swiss banking community.

In November of last year, SIX as part of its strategic redirection announced that the cards business (merchant acceptance & acquiring and international card processing) will be carved-out with the aim to enter a strategic partnership. The European payments industry is consolidating, and large players with a broad product and geographic offering are gaining a competitive edge. As one of the leading companies in European payments today, SIX Payment Services is partnering with Worldline to create the leading and largest European payments provider. The respective markets of both partners complement each other very well. New technologies can be jointly and efficiently developed and implemented from a position of strength.

Romeo Lacher, Chairman of the Board of Directors of SIX said:

"In an environment that has recently excelled above all through consolidation, we are actively shaping this development so that going forward we can continue to be the central provider of payment services in the financial market infrastructure sector for our customers in the future. We are very happy that in Worldline we have found a well-known and strong international partner who will work with us to advance and further develop the payment business. This strategic partnership makes us Europe's leading and largest provider in one go. In the future, in addition to the existing SIX Payment Services offering, our customers will also benefit from Worldline's innovative solutions along the entire value chain of cashless payment transactions".

Thierry Breton, Atos Chairman and Chief Executive Officer, Worldline Chairman, said:

"The strategic agreement announced today between Worldline and SIX is of fundamental importance in the European payment industry. I am very honored that Worldline has been selected by SIX, after a very competitive process, as the right partner to join forces with their leading payment business.

More than ever, Worldline thanks to its strong industrial culture and track-record since its 2014 IPO and its privileged access to the leading Atos technologies, confirms its perfect positioning and its unique ability to be the perfect long-term payment partner for the European financial industry in these times of deep regulatory and digital transformations of the sector.

I am very happy to welcome in the coming months SIX within the Worldline shareholding and governance and to pursue together our common ambition to create massive value through the future strategic developments of our Company and achieve our common vision towards a cashless society."

Gilles Grapinet, Worldline CEO, said:

"For Worldline, reinforced by the talents of our future managers and colleagues from Six Payment Services, this formidable industrial merger is a major strategic step forward.

Together, we will benefit from reinforced industrial scale, numerous synergies and complementarities that will boost our development, our profitability and that will at the same time, enlarge significantly our offerings to our customers, strongly benefit to our shareholders while opening new professional development opportunities for our all our employees.

Through this merger, our Company with its intact financial firepower and its unrivalled size in our continent, will be better positioned than ever to continue its strategic endeavor to build, in the heart of Europe, a new global leader of the payment industry."

The merger of SIX Payment Services within Worldline would allow major enhancement to the business profile and positions of the combined group as follows:

c. +30 % Group revenue increase and staff increase of +1.600 (+17 %);
c. +65% increase in the Merchant Services business attaining over € 1 billion annual revenue and a n°1 position in continental Europe;
major rebalancing of Worldline European geographic presence thanks to the acquisition of many new leading positions in the DACH region;
c. +12% increase in the Financial Services business, which will reach c. € 900 million revenue, further reinforcing its existing n°1 position;
a new 10 year commercial relationship, through and with SIX, to deliver financial processing services to the Swiss banking ecosystem, long term oriented quality of services and best-in-class innovation.
In Merchant Services, the acquisition of SIX Payment Services would be a clear quantum leap allowing Worldline to establish itself as the n°1 non-bank acquiring platform in Continental Europe, through the following transformational impacts:

New n°1 market positions in Switzerland, Austria, Luxembourg and major reinforcement in Germany, complementing the existing strong position of Worldline in Belgium, the Netherlands, France and Germany ;
Many new leading specialized solutions and offers coming from SIX Payment Services (Travel, Hotels, restaurants, DCC[2], .) would complement the strong innovative portfolio of Worldline (online gateways, mobile payments, Payment terminals, .) ;
Massive benefits for the merchant customers base of both companies, thanks to an unparalleled Merchant Services offering across physical and online payments, vertical segments, pan-European geographic reach, and capabilities;
Unique positioning as the most attractive bank partner for successful alliances in payment acceptance and commercial acquiring.

With revenues reaching an estimated c. EUR 2.3bn in 2019, the combined entity would have reinforced its existing n°1 position within the European payments landscape, reaching c. 10% European market share in Merchant Acquiring and c. 20% in Financial Services. Through this size increase, the enhanced company profile and all the expected market impacts, the merger would also widely benefit to the managers and employees of both companies, allowing them to get access to numerous and more diversified positions as well as new exciting professional challenges.

A detailed industrial program would be implemented with the objective to reach c. EUR 110m additional OMDA in 2022, of which c. 25% will be achieved in 2019 and c. 50% in 2020. The synergy plan is mainly based on cost rationalization notably in IT infrastructure, G&A expense, procurement and real estate, optimization of sales and customer support as well as revenue expansion through complementary and highly innovative offerings, both in merchant services and financial services.

The cost to implement the synergies is estimated at EUR 110m.

Revenue growth rate

The current SIX Payment Services revenue growth profile is consistent with Worldline's and therefore would contribute to secure Worldline's 2019 revenue growth rate objective.

Thanks to the rebalancing of the combined group revenue towards Merchant Services, the transaction should contribute in the next 3 year plan (2020-2022) to an acceleration of Worldline's revenue growth thanks to the new business mix.

Profitability

Worldline's 2019 OMDA objective of "Above 23%" would be maintained thanks to SIX Payment Services profitability associated with the fast implementation of the synergies. The c. EUR 110m of OMDA run rate synergies identified in 2022 (out of which c. 25% expected as soon as 2019 and c. 50% expected in 2020) should lead to a significant margin upside in the medium term.

Free cash flow

The cash generation ratio of SIX Payment Services is estimated to be in line with Worldline's cash conversion ratio (Free Cash Flow / OMDA ratio).

Value creation

Notwithstanding the very strong share component in the consideration mix, a strong value creation is anticipated thanks to the generation of the synergies. As such the transaction is expected:

To be slightly accretive to EPS[4] in 2019;
To reach high single digit EPS4 accretion in 2020;
To reach double digit EPS4 accretion in 2021.

Financial flexibility

This transaction would result in a total estimated cash out of c. EUR 374m, financed by available cash. Post-closing, the Group anticipates a net cash position at c. EUR 150m at the end of 2018.

Governance

The Corporate governance of Worldline would be adapted in order to take into account the partnership with SIX and the common objectives for the combined Group. Worldline's Board of Directors will be enlarged to 12 Board Members and one censor, out of which two Board members and one censor to be designated by SIX and one new independent Director.

In addition, SIX would be represented by one or two representatives in each of the Board of Directors committees (Audit, Nomination & Remuneration, Investment, and a newly created Strategic & Innovation Committee).

Timing of the transaction

The transaction is expected to close during the fourth quarter of 2018, after the finalization of the carve out of SIX Payment Services from SIX Group and a Worldline Extraordinary General Meeting that will approve the issuance of new Worldline shares in exchange for the contribution of SIX Payment Services to Worldline.

Atos fully supports the transaction and has committed to vote all of the Worldline shares it currently holds in favor of the share issuance and the contribution at the Worldline Extraordinary General Meeting.

The transaction is also subject to work councils' information and European companies work council consultation processes in Worldline and Atos European companies work council, as well as customary antitrust and regulatory approvals.

Consolidation in Worldline's financial statements is expected as from January 1, 2019.

[1] Germany, Austria and Switzerland
[2] Dynamic Currency Conversion
[3] Visa Class C convertible preferred stock
[4] Earnings Per Share, after synergy implementation costs and before PPA amortization

FirstGroup’s [LON:FGP] board has received a letter from the activist investment firm West Face Capital calling for a strategic review of options including a sale, break-up or a spin-off of its North American business, The Daily Telegraph reported. The newspaper quoted from the letter, which was seen by the newspaper.

In the letter, West Face criticised the FTSE-100 transport group’s board for what it claims is its failure to remedy “chronic” underperformance and said the board’s inaction left FirstGroup vulnerable to “opportunistic” takeover offers from the private equity firm Apollo Global Management.

West Face owns a 2.5% shareholding in FirstGroup and is one of the transport company’s 15 biggest investors, the item noted.

The activist investor said it has presented proposals aimed at improving FirstGroup’s performance four times in the past year, and that FirstGroup has rejected all of its proposals without providing a “compelling explanation,” the report continued.

FirstGroup chief executive Tim O’Toole dismissed calls for a review of strategic options in July 2017, the newspaper said.

West Face claimed that the CEO “has failed” and that FirstGroup has performed worse than its peers.

Apollo submitted two offers, although FirstGroup’s board would not give details of the price. The buyout group abandoned its proposed offer last week, prompting a 10% fall in FirstGroup’s share price, the report noted.

According to West Face, one third of FirstGroup shareholders think the business is undervalued, the item continued. West Face has demanded that FirstGroup form a subcommittee before its AGM on 17 July, the article added.

The report went on to quote FirstGroup, which said on Monday, 14 May that the board will listen to all suggestions for improving value in the long term and that it values input from shareholders. FirstGroup added that its board thinks the expertise and scale of each of its businesses has “considerable value.”

West Face refused to comment, the item said.

FirstGroup’s share price closed 4.2p up at 109.6p in London on Monday, giving the company a market capitalisation of GBP 1.33bn (EUR 1.51bn).

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Hochtief [FRA:HOT] will have to request the Spanish market regulator CNMV to exempt it from launching a de-listing takeover bid to buy the 13.25% shares of Abertis Infraestructuras [BME:ABE] that has not accepted its proposal, El Economista reported, without citing sources.

Spanish takeover law allows it when the offer is directed at 100% of the share capital, the price is justified and the purchase and sale of the remaining shares is facilitated by means of a purchase order at the same price as the bid for at least one month in the six months following the completion of the preceding bid.

In its offer document, Hochtief anticipated this route if it did not reach the minimum 90% threshold of acceptance, as has happened, the Spanish-language paper noted. As reported, the voluntary takeover offer has been accepted by shareholders representing 78.79% of the share capital of Abertis, a percentage that rises to 85.60% discounting the concessionaire's treasury stock.

As a consequence of this scenario, Hochtief will delay taking control of Abertis until September, El Economista said.