Nuvei Enters Definitive Agreement to Acquire Paya
“The proposed acquisition of Paya is a powerful next step in the evolution of
"We are pleased to have reached this transaction with
Strategic Rationale and Benefits of the Transaction
- Enhances Nuvei’s ability to execute on high-growth integrated payment opportunities
- Paya’s deep software integrations with 300+ independent software vendor (“ISV”) platforms and end-to-end commerce solutions position
Nuvei to capitalize on the domestic and global software-led market opportunity - Plugs Paya’s highly complementary integrated payment capabilities into Nuvei’s global technology platform for an enhanced customer proposition and incremental growth opportunities
- Integrated payments is the highest-growth card payments distribution channel in the
U.S. 1 For 2021, roughly 41% of new merchants in the US were signed from the integrated payments channel2
- Paya’s deep software integrations with 300+ independent software vendor (“ISV”) platforms and end-to-end commerce solutions position
- Diversifies Nuvei’s business across high-growth, underpenetrated and non-cyclical end markets each with a large estimated total addressable market (“TAM”)
- Paya has a strong footprint in key non-cyclical verticals, including B2B goods and services (estimated
$1.2 trillion TAM)3, healthcare (estimated$235 billion TAM)4, non-profit and education (estimated$145 billion TAM)4, and government and utilities (estimated$130 billion TAM)4
- Paya has a strong footprint in key non-cyclical verticals, including B2B goods and services (estimated
- Expands Nuvei’s capabilities into large and growing B2B
- Paya’s deep enterprise resource planning (ERP) integrations and end-to-end commerce solutions position
Nuvei to capitalize on the domestic and global B2B opportunity - The
U.S. B2B payments middle market is expected to grow at a 10%+ compound annual growth rate (CAGR) (2019-2026) with an estimated market size of$2.3 trillion in 20263
- Paya’s deep enterprise resource planning (ERP) integrations and end-to-end commerce solutions position
- Amplifies Nuvei’s existing growth strategy
- Establishes Paya’s leading ISV and B2B capabilities in Nuvei’s global markets
- Accelerates growth by offering Nuvei’s solutions into Paya’s partners and customers in the
U.S. - Broadens strong ISV and eCommerce capabilities to enter new markets
- Expands M&A scope to include ISV, B2B and proprietary software opportunities
- Reinforces Nuvei’s compelling financial profile
- On a combined basis5 for the last twelve months (“LTM”) ended
September 30, 2022 , Combined Total volume6 was approximately$167 billion , Combined Revenue7 was approximately$1.1 billion , and Combined Adjusted EBITDA7 was approximately$429 million (which does not include up to$21 million of estimated run-rate cost synergies expected to be achieved within 24 months)8, and Combined Adjusted EBITDA less capital expenditures was approximately$380 million 7. Nuvei’s LTM net income and revenue was$65 million and$835 million , respectively, and Paya’s LTM net income and revenue was$9.5 million and$277 million , respectively.
- On a combined basis5 for the last twelve months (“LTM”) ended
Transaction Details
The transaction has been unanimously approved by each party’s Board of Directors, and the Board of Directors of Paya intends to recommend the transaction to Paya’s stockholders. Pursuant to the terms of the agreement,
The purchase price represents a 25% premium to the
Nuvei’s net leverage ratio, defined as the ratio of consolidated net debt outstanding (outstanding credit facilities less cash), to consolidated adjusted EBITDA, calculated in accordance with the terms of Nuvei’s credit agreement, is expected to be less than 3x upon (and giving effect to) the closing of the transaction.
The proposed transaction is expected to deliver up to
An investment fund affiliated with
The Merger Agreement also includes customary termination provisions for both
Advisors
Bank of Montreal and Royal Bank of Canada have provided committed financing to
Conference Call and Webcast Information
Nuvei’s management team will host a conference call to discuss details about the acquisition today,
The conference call can also be accessed live over the phone by dialing 877-425-9470 (US/
About
For more information, visit www.nuvei.com
About
Paya (NASDAQ: PAYA) is a leading provider of integrated payment and frictionless commerce solutions that help customers accept and make payments, expedite receipt of money, and increase operating efficiencies. The company processes over
Additional Information and Where to Find It
The tender offer described in this document has not yet commenced. This communication is for informational purposes only and is neither an offer to purchase nor a solicitation of an offer to sell shares of Paya nor is it a substitute for any tender offer materials that Merger Sub (“Merger Sub”), a subsidiary of
INVESTORS AND STOCKHOLDERS OF PAYA ARE URGED TO READ THE TENDER OFFER MATERIALS (INCLUDING AN OFFER TO PURCHASE, A RELATED LETTER OF TRANSMITTAL AND CERTAIN OTHER TENDER OFFER DOCUMENTS) AND THE SOLICITATION/RECOMMENDATION STATEMENT AND ANY OTHER RELEVANT DOCUMENTS THAT MAY BE FILED WITH THE
The Offer to Purchase, the related Letter of Transmittal and certain other tender offer documents, as well as the Solicitation/Recommendation Statement, will be sent to all stockholders of Paya at no expense to them. Free copies of these materials and certain other offering documents will be available by directing requests for such materials to the information agent for the offer, which will be named in the Tender Offer Statement. Investors and stockholders of Paya will be able to obtain free copies of these materials (if and when available) and other documents containing important information about Paya and the proposed transaction once such documents are filed with the
No Offer or Solicitation
This communication is for information purposes only and is not intended to and does not constitute, or form part of, an offer, invitation or the solicitation of an offer or invitation to purchase, otherwise acquire, subscribe for, sell or otherwise dispose of any securities, or the solicitation of any vote or approval in any jurisdiction, pursuant to the proposed transaction or otherwise, nor shall there be any sale, issuance or transfer of securities in any jurisdiction in contravention of applicable law. The proposed transaction will be implemented solely pursuant to the terms and conditions of the Merger Agreement between
Presentation of Financial Information
All dollar amounts set forth in this press release are in
References to “LTM” in this press release means the trailing twelve-month period ended
Nuvei’s financial statements are prepared in accordance with International Financial Reporting Standards as issued by the
IFRS differs in certain material respects from
Combined metrics presented in this press release are based on the summation of Nuvei’s financial information for the LTM period ended
Non-IFRS and Other Financial Measures
The information presented in this press release includes non-IFRS financial measures, and supplementary financial measures, of
The information in this press release also includes non-
Non-IFRS and Non-
Nuvei Adjusted EBITDA:
Nuvei Adjusted EBITDA less capital expenditures: Nuvei uses Adjusted EBITDA less capital expenditures (acquisition of intangible assets and property and equipment) as a supplementary indicator of operating performance. In the third quarter of 2022,
Paya Adjusted EBITDA: Paya Adjusted EBITDA represents earnings before interest and other expense, income taxes, depreciation, and amortization, or EBITDA and further adjustments to EBITDA to exclude certain non-cash items and other non-recurring items that Paya believes are not indicative of ongoing operations.
Paya Adjusted EBITDA less capital expenditures: Paya Adjusted EBITDA less capital expenditures is used as a supplementary indicator of Paya’s operating performance, and represents Paya Adjusted EBITDA less capital expenditures (purchases of property and equipment).
Combined Adjusted EBITDA: Combined Adjusted EBITDA is defined as the summation of Nuvei Adjusted EBITDA for the LTM period ended
Combined Adjusted EBITDA less capital expenditures: Combined Adjusted EBITDA less capital expenditures is defined as the summation of Nuvei Adjusted EBITDA less capital expenditures for the LTM period ended
Combined Revenue: Combined Revenue is defined as the summation of Nuvei’s revenue under IFRS for the LTM period ended
Supplementary Financial Measures
Nuvei Total volume and eCommerce volume: Nuvei Total volume and similar measures are used widely among others in the payments industry as a means of evaluating a company’s performance.
Combined Total volume: Combined Total volume means the summation of Nuvei Total volume for the LTM period ended
Reconciliation of Nuvei Total volume, Nuvei Revenue, Nuvei Adjusted EBITDA, Nuvei Adjusted EBITDA less capital expenditures and Nuvei Net income for the trailing twelve months ended
Three months ended |
Nine months ended |
Twelve months ended |
|
(in |
$ | $ | $ |
Total volume (in billions) | 31.5 | 87.4 | 118.9 |
Revenue (in millions) | 211.9 | 623.0 | 834.9 |
Adjusted EBITDA (in millions) | 91.5 | 265.6 | 357.1 |
Adjusted EBITDA less capital expenditures (in millions) | 81.8 | 231.8 | 313.6 |
Net income (in millions) | 12.3 | 52.6 | 64.9 |
Reconciliation of Nuvei Adjusted EBITDA and Nuvei Adjusted EBITDA less capital expenditures to Nuvei Net income
Three months ended |
Nine months ended |
Twelve months ended |
||||
(In millions of |
$ | $ | $ | |||
Net income | 12.3 | 52.6 | 64.9 | |||
Finance cost | 5.0 | 13.6 | 18.6 | |||
Finance income | (0.6) | (6.4) | (7.0) | |||
Depreciation and amortization | 25.9 | 79.8 | 105.7 | |||
Income tax expense | 7.5 | 19.8 | 27.4 | |||
Acquisition, integration and severance costs(a) | 8.8 | 21.5 | 30.3 | |||
Share-based payments and related payroll taxes(b) | 34.7 | 103.8 | 138.4 | |||
Loss (gain) on foreign currency exchange | (2.5) | (20.4) | (22.9) | |||
Legal settlement and other(c) | 0.2 | 1.4 | 1.6 | |||
Adjusted EBITDA | 91.5 | 265.6 | 357.1 | |||
Acquisition of property and equipment, and intangible assets | (9.6) | (33.8) | (43.5) | |||
Adjusted EBITDA less capital expenditures | 81.8 | 231.8 | 313.6 |
(a) These expenses relate to:
(i) professional, legal, consulting, accounting and other fees and expenses related to Nuvei’s acquisition activities and financing activities. For the nine months ended
(ii) acquisition-related compensation. For the nine months ended
(iii) change in deferred purchase consideration for previously acquired businesses. Gains of
(iv) severance and integration expenses. For the nine months ended
(b) These expenses represent expenses recognized in connection with stock options and other awards issued under share-based plans as well as related payroll taxes that are directly attributable to share-based payments. For the nine months ended
(c) This line item primarily represents legal settlements and associated legal costs, as well as non-cash gains, losses and provisions and certain other costs. These costs are presented in selling, general and administrative expenses.
Reconciliation of
Year ended |
Nine months ended |
Calculated three months ended |
Nine months ended |
Twelve months ended |
|||
(in |
$ | $ | $ | $ | $ | ||
Payment volume (in billions) | 42.9 | 31.2 | 11.7 | 36.6 | 48.3 | ||
Revenue (in millions) | 249.4 | 182.3 | 67.1 | 209.9 | 277.0 | ||
Adjusted EBITDA (in millions) | 65.2 | 47.9 | 17.3 | 54.2 | 71.5 | ||
Adjusted EBITDA less capital expenditures (in millions) | 59.5 | 42.9 | 16.6 | 50.0 | 66.6 | ||
Net income (loss) (in millions) | (0.8) | (5.1) | 4.3 | 5.2 | 9.5 |
Reconciliation of Paya Adjusted EBITDA and Paya Adjusted EBITDA less capital expenditures to
Year ended 2021 |
Nine months ended 2021 |
Calculated three months ended 2021 |
Nine months ended 2022 |
Twelve months ended 2022 |
||||||
(in millions |
$ | $ | $ | $ | $ | |||||
Net income (loss) | (0.8) | (5.1) | 4.3 | 5.2 | 9.5 | |||||
Depreciation & amortization | 30.0 | 22.4 | 7.6 | 24.1 | 31.7 | |||||
Income tax expense | 1.3 | 2.6 | (1.3) | 3.4 | 2.1 | |||||
Interest and other expense | 22.1 | 19.0 | 3.1 | 8.3 | 11.4 | |||||
EBITDA | 52.6 | 38.9 | 13.7 | 41.0 | 54.7 | |||||
Transaction-related expenses(a) | 3.0 | 2.4 | 0.6 | 3.0 | 3.6 | |||||
Stock-based compensation(b) | 3.7 | 2.5 | 1.2 | 5.6 | 6.8 | |||||
Restructuring costs(c) | 2.2 | 1.2 | 1.0 | 2.4 | 3.4 | |||||
Discontinued service costs(d) | 0.2 | 0.2 | — | 0.3 | 0.3 | |||||
Non-recurring public company start-up costs | 1.1 | 0.8 | 0.3 | 0.4 | 0.7 | |||||
Contingent non-income tax liability | 0.8 | 0.8 | — | 0.1 | 0.1 | |||||
Other costs(e) | 1.6 | 1.1 | 0.5 | 1.4 | 1.9 | |||||
Total adjustments | 12.6 | 9.0 | 3.6 | 13.2 | 16.8 | |||||
Adjusted EBITDA | 65.2 | 47.9 | 17.3 | 54.2 | 71.5 | |||||
Purchases of property and equipment | (5.7) | (5.0) | (0.7) | (4.2) | (4.9) | |||||
Adjusted EBITDA less capital expenditures | 59.5 | 42.9 | 16.6 | 50.0 | 66.6 |
(a) Represents professional service fees related to mergers and acquisitions such as legal fees, consulting fees, accounting advisory fees, and other costs.
(b) Represents non-cash charges associated with stock-based compensation expense, which has been, and will continue to be for the foreseeable future, a significant recurring expense in our business and an important part of our compensation strategy.
(c) Represents costs associated with restructuring plans designed to streamline operations and reduce costs including costs associated with the relocation of facilities, certain staff restructuring charges including severance, certain executive hires, and acquisition related restructuring charges.
(d) Represents costs incurred to retire certain tools, applications and services that are no longer in use.
(e) Represents non-operational gains or losses, non-standard project expense, and non-operational legal expense.
Reconciliation of Combined Total volume, Combined Revenue, Combined Adjusted EBITDA and Combined Adjusted EBITDA less capital expenditures for the trailing twelve months ended
Paya | Combined | ||
(in |
$ | $ | $ |
Total volume and Payment volume (in billions) | 118.9 | 48.3 | 167.2 |
Revenue (in millions) | 834.9 | 277.0 | 1,111.8 |
Adjusted EBITDA(a) (in millions) | 357.1 | 71.5 | 428.6 |
Adjusted EBITDA less capital expenditures (in millions) |
313.6 | 66.6 | 380.2 |
(a) Does not include up to
Forward-Looking Information
This press release contains “forward-looking information” within the meaning of applicable securities laws. Forward-looking information is identified by the use of terms and phrases such as “may”, “would”, “should”, “could”, “expect”, “intend”, “estimate”, “anticipate”, “plan”, “foresee”, “believe”, or “continue”, the negative of these terms and similar terminology, including references to assumptions, in each case as they relate to the Company, Paya or the combined business following the proposed transaction, although not all forward-looking information contains these terms and phrases. Particularly, statements relating to the proposed transaction and its expected consummation, the conditions precedent to the closing of the proposed transaction, the committed credit facility, available liquidities/cash on hand, the attractiveness of the proposed transaction from a financial perspective in various financial metrics; expectations regarding anticipated cost savings and synergies; the strength, complementarity and compatibility of the Paya business with Nuvei’s existing business; other anticipated benefits of the proposed transaction; Nuvei’s business outlook, objectives, development, plans, growth strategies and other strategic priorities; Nuvei’s estimated position and strengths in integrated payments, B2B and global eCommerce; the estimated size of addressable markets; and statements relating to Nuvei’s future growth, results of operations, performance, business, prospects and opportunities, the expected synergies to be realized and certain expected financial ratios; expectations regarding revenue synergies, up-selling and cross-selling opportunities and intention to capture an increasing share of addressable markets, and other statements that are not historical facts constitute forward-looking information. The
In addition, any statements that refer to expectations, intentions, projections or other characterizations of future events or circumstances contain forward-looking information. Statements containing forward-looking information are not historical facts but instead represent management’s expectations, estimates and projections regarding future events or circumstances. Forward-looking information is based on management's beliefs and assumptions and on information currently available to management, including, among other things, assumptions about the satisfaction of all closing conditions (such as regulatory approval for the proposed transaction and the tender of at least a majority of the outstanding shares of common stock of Paya) and the successful completion of the proposed transaction within the anticipated timeframe; Nuvei’s ability to retain and attract new business, achieve synergies and strengthen its market position arising from successful integration plans relating to the proposed transaction; Nuvei’s ability to otherwise complete the integration of the Paya business within anticipated time periods and at expected cost levels; Nuvei’s ability to attract and retain key employees in connection with the proposed transaction; management’s estimates and expectations in relation to future economic and business conditions and other factors in relation to the proposed transaction and resulting impact on growth in various financial metrics; assumptions regarding foreign exchange rate, competition, political environment and economic performance of each region where
Although the forward-looking information contained herein is based upon what we believe are reasonable assumptions, investors are cautioned against placing undue reliance on this information since actual results may vary from the forward-looking information.
Forward-looking information involves known and unknown risks and uncertainties, many of which are beyond our control, that could cause actual results to differ materially from those that are disclosed in or implied by such forward-looking information. These risks and uncertainties include, but are not limited to, Nuvei’s inability to successfully integrate the Paya business upon completion of the proposed transaction; the possible delay or failure to satisfy the conditions to the closing of the proposed transaction; legal proceedings that may be instituted related to the Merger Agreement; the risk that the proposed transaction may not be completed in a timely manner, or at all; the potential failure to obtain the regulatory approvals in a timely manner, or at all; the potential failure to realize anticipated benefits from the proposed transaction; the occurrence of any event, change or other circumstance that could give rise to the termination of the definitive agreement, including as a result of a superior proposal;
Consequently, all of the forward-looking information contained herein is qualified by the foregoing cautionary statements, and there can be no guarantee that the results or developments that we anticipate will be realized or, even if substantially realized, that they will have the expected consequences or effects on our business, financial condition or results of operation. Unless otherwise noted or the context otherwise indicates, the forward-looking information contained herein represents our expectations as of the date hereof or as of the date it is otherwise stated to be made, as applicable, and is subject to change after such date. However, the Company and Paya disclaim any intention or obligation or undertaking to update or amend such forward-looking information whether as a result of new information, future events or otherwise, except as may be required by applicable law.
Nuvei Investor Contact
Vice President, Head of Investor Relations
anthony.gerstein@nuvei.com
Nuvei Media Contact
Guillaume Conteville
Chief Marketing Officer
guillaume.conteville@nuvei.com
Paya Investor Contact
ir@paya.com
Paya Media Contact
pr@paya.com
__________________
1 Bain Future of Payments report, 2023.
2
3 Cantor Fitzgerald Initiating Coverage report,
4 Paya Company Overview Presentation,
5 Combined metrics presented in this press release are based on the summation of Nuvei’s financial information for the LTM period ended
6 Combined Total volume does not represent revenue earned by the Company or Paya, as applicable, but rather the total dollar value of transactions processed by merchants under contractual agreement with the Company or payments processed by Paya’s customers through its services, respectively.
7 Combined Adjusted EBITDA, Combined Adjusted EBITDA less capital expenditures and Combined Revenue are non-IFRS measures. These measures are not recognized measures under IFRS and do not have standardized meanings prescribed by IFRS and therefore may not be comparable to similar measures presented by other companies. See “Non-IFRS and Other Financial Measures.”
8 Integration-related costs required to realize such cost synergies estimated at approximately
9 Based on 2023 consensus estimates according to FactSet, assuming the full benefit of estimated run-rate cost synergies of approximately
10 Senior secured pari passu first lien reducing revolving credit facility. Maturity is expected to be coterminous with Nuvei’s existing term loan facility.
Source: Nuvei Corporation
Source: Paya Holdings Inc.