MILAN, Dec 19 (Reuters) - Intesa SanPaolo is selling its retailers’ payment business to Nexi in a 1 billion euro ($1.1 billion)deal that will make the Italian bank a 10% investor in the country’s biggest payments group.
Intesa said it expected to reap an around 900 million euro capital gain from the deal when it closes next year, “extracting proper value” from a business line that requires scale and investments to face growing international competition.
The bank, which has been supporting generous dividend payments partly through one-off transactions such as this one, said it may reinvest part of the proceeds from the Nexi deal.
“This capital gain might not be reflected in the net income entirely if, over the course of next year, allocations are identified that are appropriate to strengthen sustainable profitability,” Italy’s top bank by number of branches said.
Nexi said the transaction would add around 95 million euros to its 2020 core profit and drive a ‘high teens’ increase in its cash earnings per share.
Shares in Nexi rose 4.6% by 1421 to 11.44 euros each. Intesa shares were flat.
Under the deal, Intesa will transfer its so-called merchant acquiring business comprising 380,000 retail outlets to a Nexi subsidiary for a value of 1 billion euros, receiving in return shares in the unit.
It will then sell those shares to Nexi and use part of the cash received to buy a 9.9% stake in the group for 653 million euros from Nexi’s top investor Mercury UK HoldCo.
Mercury, a vehicle of private equity firms Bain Capital, Advent International and Clessidra, currently holds 60.1% of Nexi following a stock market listing in April that raised 2 billion euros.
Nexi said it had struck a long-term partnership with Intesa whereby the bank would distribute to its clients Nexi services for a period of more than 20 years. The two groups also extended a current partnership on ATM machines and the cards issuing business.
$1 = 0.8996 euros Reporting by Valentina Za Editing by Alexandra Hudson