Another deal and another burst of PR hype and overblown claims.
To take the most obvious one first to rubbish: SagePay is not quite in the same league as PayPal or Stripe or Adyen.
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Nor is Elavon buying Sage as two callers suggested-it is buying SagePay. It is quite an important distinction. And lastly, on the subject of exaggerated PR claims-this deal is not another FIS/Worldpay or Fiserv/First Data transaction.
To call up this desk and suggest that SagePay is another PayPal suggests callers have not looked at the numbers.
SagePay is being sold for £232m, slightly more than some of us may have forecast but no matter. Well done the sellers.
Nor is the deal quite the surprise that one or two callers tried to suggest. It was only two months ago that Sage said that it was seeking strategic alternatives for its payment business.
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By GlobalDataSagePay: revenue modest but in the black
In 2018 SagePay’s revenue was a modest £41m. But unlike some over-priced deals one encounters all too often, SagePay is at least not burning through investors’ cash like there is no tomorrow. It even posted an operating profit of £15m in 2018.
Sage Group estimates that it will make a statutory profit on disposal of its payment processing unit of about £180m.
And to be fair, it looks a good fit. As a result of the deal, US-Bank owned Elavon expands its market share in the UK and Ireland, especially among the SME sector.
In addition, Elavon has made some serious hires of late. For example, in July Elavon appointed Scott Frisby from First Annapolis Consulting (now part of Accenture). Frisby, a long time friend of this parish, joined Elavon as its new Head of Strategy for Europe.
As well as driving Elavon’s European strategy as it capitalises on the growth of alternative payment methods, PSD2 and Open Banking, he is also driving M&A activity in Europe.
Having acquired Sweden-based Payius in October and now announced the SagePay deal, Elavon is indeed ramping up its M&A activity.
So the market becomes a fraction less fragmented. The deal represents a nice bit of business for the M&A lawyers and bankers and will boost bonuses come the New Year.
But in terms of transforming the market-leave it out. It is an interesting deal, representing more of the same that will do little to affect market share league tables.
2019 a year of memorable deals
2019 kicked off with a memorable Visa versus Mastercard bidding war for Earthport. Bigger deals for First Data and Worldpay followed.
So much for those commentators in early 2019 who suggested the US might dip into recession. Moreover, it was said by a few bearish observers that US trade wars might lead investors to be more cautious.
The Earthport saga set the tone for a hectic year of deal making for both Visa and Mastercard.
Total financial services industry M&A deals in the third quarter worth $57.3bn were announced globally, according to GlobalData’s deals database. That is an increase of 21.9% over the prior quarter. The most significant deal announced was the London Stock Exchange $27bn acquisition of Refinitiv. But as EPI goes to press, SIX Group’s €2.8bn bid for Spain’s Bolsas y Mercados Españoles deserves a mention.
In particular, as SIX is going head to head with Euronext, owners of the main exchanges in Paris, Amsterdam, Brussels, Lisbon, Oslo and Dublin.
BME operates the Spanish stock exchange and is the cornerstone of the Spanish markets. The SIX offer represents a premium of 47.6% over BME’s 6-month volume weighted average share price.
SIX Group has tendered an all cash bid of around €2.8bn. If successful, the deal will create the third-largest European financial market infrastructure group.
