Hellman nets Nets A/S for $5.3bn

November 2017 | DEALFRONT | PRIVATE EQUITY & VENTURE CAPITAL

Financier Worldwide Magazine

November 2017 Issue

Following continued speculation that a deal was pending, Danish payment service provider Nets A/S has confirmed that it is to be taken private by a consortium led by US private equity firm Hellman & Friedman for around $5.3bn. The deal is the latest in a series of M&A deals in the burgeoning and increasingly attractive payment services industry.

Inge Hansen, chairman of Nets, said in a statement announcing the merger: “We believe the offer represents attractive value to Nets’ shareholders. Hellman & Friedman approached us in June, following which we received a number of other expressions of interest and held discussions with selected parties. Having considered all options available to us, including continuing as a listed company, we are satisfied that the cash offer of DKK 165 per share to all shareholders is the most attractive alternative available. We believe Hellman & Friedman is a responsible, growth oriented owner who will be able to take a long-term strategic approach to the development of Nets to the benefit of our stakeholders.”

To acquire Nets, San Francisco-based Hellman & Friedman has joined with Singapore wealth fund GIC Pte Ltd and funds managed by Advent International Corp and Bain Capital Ltd in a consortium known as Evergood 5 AS. Advent and Bain are already major shareholders in Nets. The consortium is offering around US$26 per share for Nets, a premium of 27 percent to Nets’ share price on 30 June 2017, the day before Nets confirmed it had received takeover approaches. According to Nets’ statement, investors holding 46 percent of the company’s stock have already agreed to the takeover. The company noted that the deal is expected to close in Q1 2018.

“We see an opportunity under private partnership to harness the expertise from the Nordic region – which is one of the most dynamic – and have the financial flexibility to examine consolidation,” said Patrick Healy, deputy chief executive at Hellman & Friedman, regarding the deal.

According to Nets, whose services allow merchants, corporations and banks to accept and process credit- and debit-card, as well as online payments across the Nordic region, the company held discussions with multiple parties since it had been approached about a potential takeover in June; those discussions resulted in one binding offer from Hellman.

The payment services industry has seen a flurry of dealmaking activity in recent months as the fragmented sector has begun to consolidate. In July, Blackstone Group LP and CVC Capital Partners joined forces to acquire UK online payments processor Paysafe Group PLC for about $4bn. In August, Vantiv Inc announced a $10bn takeover of UK payments processor Worldpay Group PLC. August also saw private equity firm Vista Equity Partners agree to sell certain payment technologies to Global Payments Inc, an Atlanta-based payments processing company, for about $1bn.

While the payments industry is, in many respects, still in its infancy, it is becoming increasingly attractive to investors and private equity firms in particular. Nets, for example, reported a 6 percent rise in revenue in H1 2017 on the back of continued growth in e-commerce as well as the firm’s direct debit and other electronic billing services. Growth of this magnitude is attracting investors across the sector.

Nets is not unknown to private equity owners; indeed, buyout firms Advent, Bain Capital and ATP, a Denmark-based pension fund, agreed to buy Nets from a group comprised mostly of Danish and Norwegian banks for around $2.7bn in 2014. Nets went public in 2015 in an IPO that valued the company at more than $4.5bn.

Richard Summerfield