Nets has agreed a 33.1 billion Danish crown ($5.3 billion) bid from US firm Hellman & Friedman, marking what could be one of the largest European private equity takeovers in recent years.
Nets said in July it had been approached by potential buyers as the payments industry sees a wave of deals, with consumers switching to card and mobile payments and regulatory changes promising to open up the fragmented market.
The Danish firm was taken public in Copenhagen a year ago and was valued at 30 billion crowns, or 150 crowns per share, double what Advent International, Bain Capital and Danish pension fund ATP had paid for it two years earlier.
The European payments industry is consolidating quickly and other recent takeover targets have included Worldpay and Paysafe.
However, the executive behind Europe’s largest buyout deal in nearly five years has hit out at the high prices the industry is paying in their pursuit of assets.
After Hellman & Friedman agreed to pay $5.3bn for Nets, Patrick Healy said: “Any time you buy something today it is at the highest price. We always focus on [so-called] winner’s curse. If you win, you obviously paid the highest price so how are you going to be able to deliver against that?”
H&F’s offer represents a roughly 30% premium to the unaffected share price of Nets, or 24 times net income. However, it is only a modest increase from the $4.5bn valuation Nets received when it when public nearly a year ago.
Buyout funds are sitting on a record amount of cash, fuelling pressure from their investors to deploy the capital. Industry insiders have cautioned that the amount of debt a company carries relative to its earnings has crept back up to all-time highs, meaning the deals could potentially go sour if the companies do not perform as expected or interest rates rise dramatically.
Addressing the terms of the deal, Mr Healy, deputy chief executive at H&F, said: “We paid the highest price and we paid the price we didn’t want to pay because that’s what was required to get the deal done.
“It’s a risk on environment . . . We are now in a market cycle where it is easier to raise money and it is easier to borrow money but it’s very difficult to find investment opportunities where you can execute.”