(BFM Bourse) – The listed structure of the mutual bank announced Monday that it had taken 7% of the capital of the payments group which is also its partner. If this decision strengthens the links between the two groups, it also risks putting off potential buyers.
The rumor had been circulating since the end of 2023, via the indiscretions of the Bloomberg press agency. It is now reality: Crédit Agricole SA, a listed entity of the Crédit Agricole bank, announced on Monday that it held 7% of the capital of the struggling payments group Worldline.
Crédit Agricole SA did not specify the amount paid to build this participation. With a capitalization of around 3.7 billion euros at Friday’s close, this 7% share would be worth around 260 million euros. The bank has just indicated that this transaction should have a lower impact of 10 points (0.10%) of base on the CET 1 capital ratio (to simplify the equity compared to the risk-weighted outstanding) of Crédit Agricole SA, which stood at 11.8% at the end of September.
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Strengthen a partnership
Crédit Agricole comes somewhat to the rescue of its partner. Last April, the two companies announced negotiations to create a joint venture offering payment services to merchants in France. This 50/50 joint company (in reality 50 plus one share for Worldline) must be operational in 2024. Analysts then judged this alliance promising, one of them considering that Worldline had struck “a big blow”.
But the payment group has since suffered a descent into stock market hell, with its shares plunging by almost 59% over one session in October. Worldline then published disappointing growth, slashed its 2023 objectives and set aside those for the medium term. A heavy disappointment which further cooled a market which had already shown disenchantment with the payments sector in recent years. Worldline shares fell 66% over one year.
“With this operation, the Crédit Agricole group reaffirms its confidence in its partner: a solid franchise, leading technologies and recognized innovation capabilities, serving its customers,” explained the bank. Worldline, for its part, welcomed, in a press release, the entry into its capital of its partner.
Good and less good
On the Paris Stock Exchange, Worldline shares progressed without igniting, gaining 2% around 3 p.m. after having reached nearly 6% at the start of the session.
This is because Crédit Agricole SA’s decision has virtues but also vices, at least from the point of view of Worldline’s minority shareholders.
The capital link which now unites the two groups certainly strengthens their mutual interests in the success of their future and promising joint venture, notes Stifel. The entry into the capital of Crédit Agricole SA also brings a factor of stability to the action, insofar as it strengthens its core shareholders, alongside the Swiss group SIX group (10.6% of the capital) and Bpifrance (4.4%).
Last point: having Crédit Agricole SA as a reference shareholder could possibly help Worldline in the refinancing of its debt, believes Stifel. “If Worldline’s debt is not a problem, having a lending bank as a minority shareholder could nevertheless help the company obtain better conditions,” argues the financial intermediary.
On the downside, Stifel considers that this operation strengthens the current management of Worldline. “Although this can be considered a positive element, we believe that in the current context, this will be perceived negatively,” judges the design office. In addition, Stifel fears that this entry into the capital will curb the desire of French banks other than Crédit Agricole to sell their merchant payment services activities to Worldline.
A predator repellent?
Last but not least, by taking 7%, Crédit Agricole SA is probably calming the ardor of predators. Which is perhaps the aim of the maneuver, Reuters having reported last week that the payments group had sought advice from banks to avoid a dark knight emerging from the shadows.
Stifel notes that the arrival of a stake in Crédit Agricole SA “constitutes a new decision intended to deter possible hostile takeover bids”.
This therefore means that the speculative nature of Worldline and therefore the probability of a takeover, synonymous with a valuation premium for its shareholders, is weakening. Consequently, Stifel considers that this Monday’s announcement is “overall slightly negative for minority shareholders”.
“If this entry into the capital is a mark of confidence and solidifies the strategic partnership, the operation also reduces speculative interest, particularly in a scenario of takeover by a private equity fund (private equity company, Editor’s note)” , dissects Invest Securities for its part.
“On the other hand, this entry into the capital does not, in our opinion, call into question the scenario of a merger with (the Italian) Nexi in the medium – long term,” continues Invest Securities. “All that remains is for the stock market revaluation of Worldline to begin so that the two groups, and particularly the French one, consider discussing,” continues the research office.
Morgan Stanley, for its part, does not see in this Monday’s announcement the slightest element likely to improve Worldline’s cash generation and has therefore reiterated its advice to “underweight”, equivalent to “sell” .
Julien Marion – ©2024 BFM Bourse
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