Hellman & Friedman set for $5bn Nets A/S takeover
Deal would rank as largest European leveraged buyout in almost five years
Hellman & Friedman is on the verge of clinching a $5bn (DKr31.1bn) takeover of Nets A/S, Scandinavia's largest payments processor, in a deal that would rank as the largest European leveraged buyout in almost five years and the latest transaction in a fast consolidating sector.
The US private equity group is racing to complete an agreement with Copenhagen-based Nets A/S and its largest shareholders, buyout firms Advent International and Bain Capital, that may be announced as soon as Monday, according to people involved in the process.
H&F, whose deal team is being led by its deputy chief executive, Patrick Healy, will acquire a majority of Nets, with a group of co-investors who are helping to fund the takeover.
The San Francisco-based firm, which the Financial Times revealed had entered into exclusive negotiations with Nets this month, is working with Singapore’s sovereign wealth fund GIC, as well as two North American-based limited partners, the people said.
Advent and Bain, which acquired Nets in 2014 in a consortium with Danish pension fund ATP Group for DKr17bn, are planning to re-invest into the deal and will emerge with a small minority stake.
The exact terms of the Nets deal are not yet known but the equity value of an agreement is expected to be around $5bn — a figure that is not substantially higher than the $4.5bn valuation Nets went public with almost exactly a year ago.
JPMorgan Chase is advising Nets on the talks.
Nets finished last week at DKr152 a share, giving it a market value of DKr30.5bn ($4.9bn). Shares in the company have climbed by 36 per cent in the past six months, fuelled by speculation of a takeover and a series of deals in the European payments processing sector, including for the UK’s Worldpay and Paysafe.
The flurry of activity comes as competitors are looking to acquire assets to build scale, strip out costs and capitalise on a shift away from cash and cheques towards digital payments.
Given that digital payments are already a prominent feature in the Nordic region, H&F may look to use Nets as a platform to strike other deals across Europe’s fragmented payments space.
The transaction highlights the lengths to which private equity firms are going to deploy capital, with the deal set to become the largest European leveraged buyout since March 2013. It would surpass a recently agreed €4.1bn takeover of German generic drugmaker Stada, which saw Bain and Cinven pay a staggering 50 per cent premium to see off rival suitors.
In the three months to June, Nets reported a 4 per cent year-on-year increase in revenues to DKr1.9bn, while earnings before interest, tax, depreciation and amortisation rose almost 7 per cent to DKr680m, excluding one-off items.
The company, which had net debt of DKr8.4bn at the end of June, has grown through acquisitions to become the leading card payments processor in Denmark, Norway and Finland and the second-biggest in Sweden. In the second quarter, the total value of transactions it processed rose 6.5 per cent year-on-year to DKr129bn.