By David French and Niket Nishant
(Reuters) -Nuvei Corp has agreed to buy Paya Holdings Inc in a deal valuing its smaller peer at $1.3 billion, the companies said on Monday, a move which would boost the Canadian payments firm's operations in the United States.
Nuvei will pay $9.75 per share in cash for Paya, according to a joint statement. While a 25% premium to Paya's last close, the deal values the Atlanta-based payments processor around the same level as when it went public through a merger with a special purpose acquisition company (SPAC).
Both Nuvei and Paya went public in 2020, supported by a wave of interest in companies processing payments digitally. However, investors shifted away from such high-growth stocks in 2022, undermining valuations and pushing payments firms to consider consolidation.
For Nuvei, which also listed in the United States in 2021, buying Paya will increase its American business as well as its exposure to payments between companies, a strategy which should make it less susceptible to rapid shifts in macroeconomic conditions and downturns in consumer spending.
"We're really excited about taking Paya's capabilities and plugging them into our global payments infrastructure," Philip Fayer, Nuvei's chief executive, told Reuters. Nuvei will pay for Paya using cash and debt including a new $600 million first-lien facility.
Fayer noted the merged entity will generate around half its revenue in the United States, compared to the 40% which Nuvei garnered from the United States and Canada combined in 2021.
While initially stumbling on news of the acquisition, Nuvei's Toronto-listed shares were trading 5.1% higher around 1:00 pm Eastern (1800 GMT). Paya shares were a touch below the offer price and set for their highest close since October 2021.
"We believe (this) is a pretty healthy valuation in this environment and doubt another party steps forward with a higher offer (for Paya)," Northland Capital Markets analyst Mike Grondahl said.
Private equity firm GTCR, which controlled Paya prior to its go-public SPAC transaction and still holds around 34% of the stock, will back the deal, the statement said.
(Reporting by David French in New York and Niket Nishant in Bengaluru; Editing by Shounak Dasgupta, Shailesh Kuber and Josie Kao)