Italy's Nexi and SIA set to agree merger on Sunday -sources

MILAN, Oct 4 (Reuters) - The boards of Italian payment group Nexi and smaller rival SIA will meet later on Sunday and are expected to agree terms for a long-discussed merger, two sources with knowledge of the deal said.

Nexi and SIA, which is controlled by Italian state lender Cassa Depositi e Prestiti (CDP), have been talking about a merger for more than a year and a half, but differences over pricing and governance have proved a sticking point.

The sources said the accord would be an all share deal, with Nexi getting about 70% of the merged company and SIA some 30%. Private equity funds own around 33% of Nexi and this holding is expected to translate into some 23% of the new concern, while CDP should have some 25% in total.

Full terms of the accord are expected to be released before markets open on Monday.

In recent weeks SIA has reached an agreement to keep UniCredit as a client and to extend the contract, removing a major hurdle in determining the company’s valuation in its talks with Nexi, sources said.

The payment sector has seen a wave of mergers and acquisitions, led by U.S. rivals seeking to build up their share of digital transactions.

French rival Worldline agreed to buy local peer Ingenico in February in a 7.8 billion euro deal that will create the fourth-biggest payments company in the world.

CDP has been looking for a deal with Nexi to create a national champion in the payment market and secure important financial infrastructure, sources said. (Reporting by Elisa Anzolin; Editing by Crispian Balmer and Barbara Lewis)