Consolidation is sweeping through the fast-expanding payments industry and the all-share deal announced late on Sunday follows Nexi's long-awaited accord to buy domestic rival SIA for 4.6 billion euros in shares.
Nexi said the two transactions would create a group with pro-forma 2020 revenue of 2.9 billion euros and core profit of 1.5 billion euros, the largest at a European payments business. Nexi-Nets-SIA would also surpass rival heavyweight Worldline-Ingenico for the number of payment cards managed and retail outlets served.
Annual integration benefits are estimated at 320 million euros, the companies said in a joint statement.
"We are creating a stronger Nexi ... and a more resilient Nexi," CEO Paolo Bertoluzzo told analysts on Monday, citing market and client diversification, scale and e-commerce exposure as key advantages.
Bertoluzzo will head the enlarged Milan-listed group.
Private equity-backed Nets is a leader in digitally advanced northern European payments markets while also present in expanding eastern European markets.
Bertoluzzo said that high-growth areas such as Germany and Poland remain a focus for further potential deals as well as banks' payment assets and their portfolios of merchant clients.
Nets shareholders will receive new Nexi shares subject to a staggered lockup of between six and 24 months. Nets shareholders could also receive up to 250 million euros of additional shares depending on Nets' 2021 core profit.
"The earn-out structure and short initial lock-up does shift the risk back to Nexi shareholders," Jefferies said in note
With a 17% stake, Italian state lender CDP, currently SIA's controlling shareholder, will be the single largest investor in the new group. Private equity firms will hold a total of 36%.
Nexi expects to close the Nets deal in the second quarter of 2021 and the SIA transaction in the third quarter. Both need antitrust approval but Bertoluzzo said the groups had no major overlaps.
Jefferies said an extended timeframe to integrate Nets helped to reduce execution risks for that was "shaping up to be one of the more complex deals undertaken in European payments".
Nexi jumped at the opportunity when U.S. group Global Payments pulled out of the race for Nets, wary of making an overseas acquisition during the coronavirus second wave, a source said, while Worldline was busy buying Ingenico.
"We had the opportunity to make the Nets deal happen now and not later and so we decided to go for it," Bertoluzzo said.
Nexi shares were up 0.3% by 1612 GMT.
(Reporting by Elisa Anzolin; Editing by Valentina Za and David Goodman)
By Elisa Anzolin