Montreal payment technology company Nuvei Corp. NVEI-T says it plans to buy Nasdaq-listed competitor Paya Holdings Inc. for about US$1.3-billion.
The all-cash deal values Paya PAYA-Q at US$9.75 a share, which is a 25-per-cent premium on its closing price last Friday. Nuvei said in a press release Monday morning that it would finance the deal with a mix of cash and a new US$600-million line of credit.
Nuvei has long used acquisitions to fuel its growth. In 2019, it bought British payments-services company SafeCharge International Group Ltd. for US$889-million.
Nuvei’s customer base includes retail, online gambling and financial-services firms. It helps clients handle payments and payouts, and offers services ranging from card issuing to fraud management. Atlanta-based Paya describes itself as one of the top payment processors in the United States, and both companies focus on integrating their systems with vendors’ software.
Philip Fayer, Nuvei’s chief executive officer and chair, said on a conference call Monday that buying Paya would expand Nuvei’s presence across North America and deepen its presence in the business-to-business payments market. The companies said they expect this market to expand at a 10-per-cent compound annual growth rate until 2026, when it could be worth as much as US$2.3-trillion. Paya also serves payments to the health care, education, non-profit and utilities sectors.
“We see a lot of momentum in this business in the short and medium term,” Mr. Fayer said. “ … The combination will help us succeed in any economic environment.”
In an e-mail, National Bank of Canada analyst Richard Tse said “it appears to be a strong strategic move to diversify their revenue base into new markets while concurrently expanding future (growth) acquisition opportunities.”
Nuvei’s net income for the quarter that ended Sept. 30 fell 57 per cent to US$13-million, before a currency-exchange hit led to a comprehensive loss of US$22-million for shareholders.
In 2020, Nuvei had the biggest debut for a tech company in the history of the Toronto Stock Exchange, but its share price has been battered since a short seller’s report in late 2021 raised questions about its executives’ histories and the way it had described some of its recent acquisitions.
Its price fell 40 per cent the day the short seller’s report was released, and has never recovered. Nuvei’s Toronto-listed shares closed 2.72 per cent higher Monday, at $37.40.
It has not been an easy ride for the payments sector in recent months. Under pressure from the tech downturn, fellow Montreal payments company Lightspeed Commerce Inc. has refocused its messaging around midterm profitability, but its shares have fallen by more than 80 per cent since it faced criticism from the same short seller, Spruce Point Capital Management, in September, 2021.