Nine days into 2023, the ongoing wave of processor consolidation rolled further with the announcement early Monday that Nuvei Corp. has agreed to acquire Atlanta-based processor Paya Holdings Inc. in a deal valued at $1.3 billion. The transaction would bring to Montreal-based Nuvei a processor with deep roots in payments for municipalities and small businesses and comes just two years after Paya’s move to go public via a merger with a special purpose acquisition company.
The deal positions Paya at a 25% premium to its closing price Friday. Its stock shot up 25% to $9.70 per share during early trading Monday, as GTCR LLC, which holds 34% of Paya’s equity, agreed to tender its shares, according to Dow Jones Newswires. For its part, Nuvei says it will fund the acquisition with a combination of cash on hand, an existing credit facility, and a $600 first lien secured credit facility. Bank of Montreal and Royal Bank of Canada have committed to financing Nuvei’s bid.
Nuvei, which was known until October 2018 as Pivotal Payments, projected in October it would report total payments volume of $121 billion for 2022, up 27% over its volume in 2021, a year in which the company reversed several straight years of net losses with $107 million in net income. Its processing volume in the third quarter alone came to $28 billion, up 30% year-over-year. As with processors such as Paysafe Group Holdings Ltd., Shift4 Inc., and other processors, Nuvei has been actively cultivating transactions in sports betting and other facets of legalized gambling.
Paya reported third-quarter volume of $12.6 billion, generating revenue of $71.4 million, with approximately 85% of its volume stemming from card-not-present transactions. Just over one-third of its volume was generated via business-to-business transactions, with the remainder coming from education, health care, and government entities and utilities. It works to distinguish itself as a provider of a single platform for card-based and ACH transactions. ACH alone accounted for 15% of the company’s revenue in the nine months through September.