Tag: Sabadell

Takeover battle delays Sabadell sale of merchant services to Nexi to 2025

Geoffrey Barraclough1 Comment

Banco Sabadell remains committed to selling its merchant services business to Nexi although the deal is on hold as the Catalan bank focuses on defeating a hostile takeover from BBVA, a larger Spanish competitor.

Speaking during the Q2 2024 results call, Sabadell CEO Cesar Gonzalez-Bueno confirmed that, “all necessary regulatory approvals have been secured, and the deal will be finalised following the conclusion of the hostile tender offer.” He went on to say that there are no break clauses, and the sale to Nexi is expected to proceed around mid-2025, approximately almost two years later than initially planned.

BBVA has not made any statement about whether the sale to Nexi would proceed should it be successful in buying Sabadell. BBVA has a good in-house merchant services offer. It could deliver considerable synergies by merging the two businesses and has less need of Nexi’s technical expertise and product roadmap. Nexi has indicated that the deal is “not automatic.”

Nexi had agreed to pay €350m for Sabadell’s merchant services unit which processes about 20% of card payments in Spain through 380,000 merchants. The sale price was reported to be based on a run rate of €30m EBITDA. However, Sabadell also disclosed that the delayed sale is not expected to impact the bank’s profit and loss statement, implying that its merchant services business is currently operating at breakeven point.

Profitable or not, Sabadell continues to display healthy topline growth. Merchant payment volume increased by 9% to €14bn in Q2 and consistently maintains a yearly run rate of over €50bn. Meanwhile, the average transaction value has decreased by 3% to €31.50 as the adoption of contactless payments continues to drive the conversion of low-value cash transactions to card payments.

Sabadell – softens commitment to sell merchant payments division as Q3 volume grows 33%

Geoffrey BarracloughLeave a comment

Banco Sabadell softened its commitment to wholly divesting its merchant payments division following Q3 results showing sharply improved market share, payment volume and fee income. Worldline, Nexi and Fiserv are all reported to be in the running to pay about €400m for Spain’s largest independent merchant acquirer. Sabadell’s CEO, Cesar Gonzalez-Bueno, said the bank is still evaluating options.

Payment volume was up 33% to €13.6bn in Q3, driven by a continued strong recovery in the Spanish travel and tourism market following the pandemic. Fee income is not disclosed but “continues to grow above turnover,” according to Gonzalez-Bueno. “In other words, we are improving our margins while we keep growing the business.”

Sabadell’s share of POS devices reached a record 20.0%, up 81bps YTD, and its share of payment volume was 16.7%, up 66bps YTD. 

With a business this good, why is Sabadell selling? According to Gonzalez-Bueno it’s about aligning with a partner which has the right products for tomorrow rather than choosing the highest cash offer today. But he indicated that Sabadell had not yet agreed the form a partnership might take, suggesting the bank may be considering a joint-venture or marketing alliance as an alternative to an outright sale. His quote from the Q3 analyst call is worth reading in full.

“We have very clear ideas around what we are looking forward in terms of partnership on our point-of-sale business… we are not only growing in volumes, in number of machines, but also we are growing in income…. .we don’t see any fragility short-term [but]…there is a tremendous potential of upgrading .. the services that we provide in the market. So, anything that we do.., if we do it, and we are analyzing alternatives, would be with an industrial mentality… we will not seek an increase of capital or an increase in value, but generating even more and better business with our clients. So, in that sense, the partnership could take different shapes.”

– Cesar Gonzalez-Bueno, CEO