October 23, 2018 / 7:58 AM / 22 days ago

Payments company Ingenico lowers earnings target again, mulls options

PARIS (Reuters) - French payments company Ingenico (INGC.PA), which is being pursued by business services company Edenred and corporate banking group Natixis, is reviewing its strategic options after lowering its earnings outlook for a second time this year.

The company cited weak performance at its arm which processes payments for banks and merchants for the lower outlook, saying it had been hit by adverse currency movements and a fall in earnings, particularly in Europe.

Ingenico now expected core 2018 earnings before interest, tax, depreciation and amortisation (EBITDA) of 510 million euros ($584 million), compared with at least 545 million euros previously.

The weaker earnings outlook could lower the value placed on the company by a potential bidder, Roche Brune Asset Management fund manager Gregoire Laverne said.

It is the second time the company has reduced its full year outlook, having already cut it from a target range of 545-570 million euros in July. At that time it said its planned exit from Iran due to the re-imposition of U.S. sanctions would also have a negative impact.

However, its shares recovered early losses after analysts welcomed Ingenico’s decision to appoint a committee of independent directors to review strategic options for the company and its corporate governance.

“The willingness to review options is quite good news as management was not previously willing to engage into serious talks,” said Montaigne Capital fund manager Pierre Willot, whose firm owns Ingenico shares.

Ingenico’s shares were up 0.4 percent by 0820 GMT, giving the company a market capitalisation of around 4 billion euros. The stock, however, remains down some 30 percent so far this year.

“It is far too early to draw any conclusions,” said Ingenico chairman and chief executive Philippe Lazare, regarding the company’s review of its options.

Lazare 61, has been at the helm of the company since 2007. His mandate is up for renewal at Ingenico’s annual board meeting in 2019.

CONSOLIDATION

Takeover activity within the payments field has been intensifying as the increasing use of smartphones to make online payments triggered consolidation, with mergers and acquisitions allowing companies to cut costs.

Worldline (WLN.PA) bought the payments unit of Swiss exchange operator SIX Group in May, and Nets merged with German peer Concardis in June.

Brokerage Keefe, Bruyette & Woods (KBW) wrote in a note that Natixis might be interested in a joint venture with Ingenico’s retail business, noting that part of Ingenico appeared to be the best performing.

A source told Reuters earlier this month that both Natixis (CNAT.PA) and Edenred (EDEN.PA) had sent letters expressing interest in Ingenico at the beginning of the summer, adding that Ingenico was talking with Natixis, although not yet with Edenred.

Backing from the French government is seen as key to the success of any bid for Ingenico, which France’s industry minister in 2010 described as essential to its electronics industry. French state bank BPI owns 5 percent of the company.

($1 = 0.8729 euros)

Reporting by Sudip Kar-Gupta and Cyril Altmeyer; Additional reporting by Alan Charlish; Editing by Sarah White and Kirsten Donovan

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