Italian Merger Builds Another Vehicle for Bigger Payments Deals

Neither Covid-19 nor the


fiasco have sapped appetite in Europe to create a payments giant to rival U.S. and Asian peers. The latest merger paves the way for more.

The $17.6 billion all-stock tie-up of Italian payments companies


and SIA, announced Monday, wasn’t much of a surprise. Negotiations were publicly discussed soon after Nexi’s initial public offering in April 2019.

Payments companies provide the plumbing for offline and online commerce, connecting banks, merchants and their customers. The market continues to grow as consumers get more comfortable shopping online and using cards and smartphones for financial transactions—trends that have only accelerated during the pandemic.

Facing mounting competition from both startups and big tech giants, though, payment companies are joining forces to build scale. Together, they hope to add more customers, cut costs and get more out of their investments in security and new technology.

Nexi is the leading payments company in Italy, while privately held SIA provides payment technology and infrastructure to financial institutions across Europe. The merger’s news release said it would create “an Italian player of European scale, ready to seize consolidation opportunities at international level.”

Cassa Depositi e Prestiti, a sort of Italian sovereign-wealth fund, will be the company’s main shareholder. It is impatient for more deals and willing to stump up capital to make them happen.

The all-Italian merger follows the all-French tie-up of




, agreed upon in February and due to complete this month. Both deals come with international ambitions. European cross-border consolidation in the payments industry faces fewer hurdles than bank tie-ups, but could still encounter political opposition given the growing perception that digital infrastructure is strategically important.

One risk in these mergers is that the operational results don’t live up to their strategic promise. Combining the systems of two or more companies into a well-functioning whole is no simple task. This is one reason why Dutch payments darling


—Europe’s most valuable fintech company by far—eschews acquisitions. The approach is informed by Chief Executive Pieter van der Does’s tumultuous experience in the first wave of payment company deal-making nearly 15 years ago. Shares of Adyen, which serves digital clients such as




changes hands for more than four times the earnings multiples of its deal-hungry rivals.

Not everyone has the luxury of following Adyen’s example, though. Europe may soon get a cross-border tie-up to test politicians’ desire to create a true regional champion.

Write to Rochelle Toplensky at [email protected]

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Appeared in the October 6, 2020, print edition as ‘Payments Merger Builds New Vehicle For Bigger Deals.’

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