Worldline and Nexi are relying mostly on M&A to expand their footprint in Europe, but after the latest deals, further consolidation won’t be without risks. Alternatively, Adyen, with a revenue growth of 40% year over year, has grown organically and it is unlikely to rely on M&A for future expansion.
Nexi needs to grow in scale and scope
Nexi obtained an EU antitrust approval for its acquisition of Nets in 1Q, expanding the company’s presence in the Nordic and central European countries. However, it needs to secure approval for its pending acquisition of SIA, which may be more complicated given the companies’ overlaps in Italy. However, these acquisitions gave Nexi access to a rapid growing market, direct payments or Account-to-Account payments (A2A). Future acquisitions in this segment may represent a more strategic approach for Nexi than just expanding its merchant business. Besides, if the company were to continue its consolidation efforts in this line of business, probably the safest option from an antitrust point of view would be to expand to western European countries where it has almost no presence.
Worldline could expand, but with limitations
Worldline probably felt the heat from the antitrust regulator in its deal with Ingenico and new acquisitions could face some regulatory pushback. In Worldine-Ingenico, the companies had to offer divestitures and other commitments to obtain the EU approval. This is a clear sign that any expansion through M&A should be directed at countries where the company has no presence, like Spain, Portugal or the U.K. Alternatively, new lines of business such as account-to-account payments may sound appealing to Worldline as this is a growing line of business and Visa and Mastercard may have restrictions to expand to this area via M&A (specially after Visa was prevented from acquiring Plaid).
Adyen is better on its own
Adyen didn’t need any merger or acquisition to have a market value of almost $70 billion and a revenue growth that could be as high as 40% annually for the next 2-3 years. Adyen’s platform allows businesses to grow quickly given the company’s scalable architecture. Any potential acquisition would likely interfere with its platform, which has been designed to be scalable and provide omnichannel services. Last, Adyen’s customer base is wider than its rivals and it spreads across Europe, North America and South America so it doesn’t really need acquisitions to expand its footprint.
