Nuvei Corp. NVEI-T is going private, but the Montreal-based digital payments processor’s largest shareholders will not be cashing out.
Two weeks after confirming takeover talks with private equity firm Advent International Corp., Nuvei said Monday the two sides have reached an agreement for an all-cash transaction valuing the company at US$6.3-billion.
Nuvei chair and chief executive Phil Fayer, Montreal-based private equity firm Novacap and pension giant Caisse de dépôt et placement du Québec (CDPQ) have all agreed to the US$34-a-share offer, which represents a 56-per-cent premium to Nuvei’s March 15 closing price on the Nasdaq exchange.
Mr. Fayer, Novacap and CDPQ collectively own the majority of Nuvei stock, but each has agreed to sell only a portion of their holdings – 5 per cent, 35 per cent and 25 per cent, respectively – to Advent for a combined cash payout of US$560-million. They will continue to own more than half of Nuvei – 24 per cent, 18 per cent and 12 per cent, respectively – once the privatization process is complete.
Mr. Fayer will also remain CEO and chair, and the company will continue to be based in Montreal, Nuvei said. Canadian actor Ryan Reynolds, who first invested in Nuvei in April, 2023, was not listed among the shareholders who will be retaining a piece of the company.
Nuvei manages payments for a wide range of businesses operating in dozens of countries. The company has more than 2,000 employees and can process 680 different payment methods denominated in 150 different currencies, including cryptocurrencies.
The company faced a substantial challenge last year when short seller Spruce Point Capital Management LLC claimed Nuvei was making acquisitions in order to obscure its growth challenges. Spruce Point abandoned its short position in June, 2023, two months after its public accusation.
Financially, Nuvei has been showing strong growth in recent months. On March 5, the company reported US$321.5-million in revenue for the final three months of 2023, up 46 per cent from the same period in 2022. Quarterly profit grew 51 per cent on a year-over-year basis to US$14.1-million.
While the Advent deal represents a small premium to Nuvei’s 2020 initial public offering price of US$26 a share, the price is also a small fraction of the US$137 a share the company was worth at its peak in September, 2021. The stock fell quickly from those highs, however, as publicly traded technology companies faced immense selling pressure amid rising interest rates.
Nuvei stock has not traded above the offer price of US$34 a share since July, 2023. During a speech in September, 2022, Mr. Frayer publicly speculated about leaving the public markets.
“Nuvei would consider going private in the event its valuation remains at these depressed levels,” he said at the time.
National Bank of Canada analyst Richard Tse said in a research note published shortly after the deal was announced that the offer appears “reasonably valued” based on previous transactions. The potential of a competing bid emerging for Nuvei is low, Mr. Tse said, given the Advent deal includes a “meaningful break fee of $150-million.”
Mr. Tse has been raising the possibility of Nuvei being acquired for years, having first included the company in a list of potential takeout candidates in a 2022 research note about the rising activity of value-focused buyers.
Nuvei is the eighth Canadian technology company that went public during the mid-pandemic frenzy of 2021 to return to private status. Q4 Inc., Dialogue Health Technologies Inc., Farmers Edge Inc., Magnet Forensics Inc., BBTV Holdings Inc. and MindBeacon Holdings Inc. have all accepted buyouts while another, E Inc., voluntarily delisted from the Toronto Stock Exchange in April, 2023.
Mr. Tse’s note to clients on Monday – which recommended Nuvei shareholders accept the Advent offer – was titled “there goes another.”