Given the way that at least a couple of mainstream media sources are apparently already working on the story, it will be rather difficult for them to pour cold water on the Nets A/S M&A story, just because it is being reported here by a free to view “maverick” platform. Also on this basis, the story cannot also be accused of being a “reheat”.
What is apparently happening here at the Denmark based provider of payment services, is that after some three years of holding onto their investment, joint owners Bain Capital and Advent International are looking for an exit. Nets is the dominant payments company in the Nordic.
The key here is that the IPO in September last year was at DKK 150 and the shares are under water. With people like Blackrock also shareholders and not in the habit of losing money, the ideal scenario would be for a take out of 30% above the float price pointing us towards DKK 190.
Nevertheless, given that the payments sector is a hot one, and occupied by giants like Apple Pay, and Paypal, we are looking at a situation where not only is Nets hot property. City of London advisers are apparently already acting on behalf of potential bidding companies. Consolidation in the sector is overdue, if only on a geographical basis for the Nordic region. Also, margins are tight and therefore acquisition is a key route to growth. This is of actually something which Nets itself has been doing – hoovering up smaller players.
As far as the timing of any deal for Nets is concerned, we may be able to gauge by the active trading going on in the stock currently, amongst the professionals. Yesterday’s buzz in volume and price was even on a poor day for the stock market. Such antics would not be happening if there was not at least a certain amount of urgency.
A target of DKK 190 plus can be envisaged here over the near term – a 30% premium to IPO. Those looking for a technical trigger point (and those sceptical of the story) probably do not need more than a daily close above DKK 132, perhaps even DKK 130.