How the Worldline-Apollo Deal Could Be a Net Positive for Ingenico

Worldline S.A.’s decision to enter negotiations to sell its Terminals, Solutions and Services unit to asset-management firm Apollo Global Management Inc. may allow the unit’s Ingenico brand to refresh its point-of-sale technology operation under the umbrella of a new owner and away from the short-term expectations of the public markets, observers tell Digital Transactions News.

“I suspect that going private will allow this Ingenico business to better focus on transforming itself from a legacy POS hardware player to a services-led payments provider without having to manage the scrutiny from Wall Street,” notes Jared Drieling, senior director for market intelligence and insights at The Strawhecker Group, an Omaha, Neb.-based consultancy, in an email message.

At the same time, the deal may free up Worldline to concentrate resources on software-as-a-service and other digital businesses connected to POS services. “Worldline’s strategy is to focus more on a payments SaaS model and therefore, sell the hardware/service part,” says Ron van Wezel, strategic advisor for the retail banking and payments group at Boston-based Aite-consultancy Novarica Group, in an email.

Paris-based Worldline announced on Monday it is working out a deal to sell its TSS unit, which consists primarily of Ingenico’s point-of-sale terminal product line, to New York-based Apollo for a price expected to be 2.3 billion euros ($2.6 billion). The announcement surprised some observers who noted that the big processor Worldline had only just acquired Ingenico two years ago in a transaction then valued at $8.6 billion.

But observers note that Apollo will be acquiring chiefly TSS’s hardware assets. “I suspect that Worldline is keeping some of the other assets or technology, such as the gateway operations, and likely looking to carve out the legacy [point-of-sale] hardware division, hence the lower valuation,” says Drieling, focusing on the difference between the 2020 price and the valuation announced Monday. An Ingenico spokesperson says the two transactions are not directly comparable, since the acquisition by Apollo is limited in scope compared to the full Ingenico product line acquired by Worldline in 2020.

Moving to Apollo could allow Ingenico to work out new products and strategies without the pressures of public ownership, some experts note, comparing Ingenico’s new position to that of rival Verifone Inc. “Verifone went private about [four] years ago to focus on reimagining their business and pulling in the resources to make a big change to their strategy and model. I suspect the Apollo/Ingenico combination has similar intentions,” Drieling says.