Apollo Global Management and Worldline have come up with a fix for dealmaking in tricky times. The 12-billion-euro payments group on Monday announced it was selling its unit which makes gadgets for card transactions in shops to the buyout group for up to 2.6 billion euros. But Worldline will only get 1.7 billion euros in cash, with the rest in preference shares in the slow-growing subsidiary.
it was selling its unit which makes gadgets for card transactions in shops to the buyout group for up to 2.6 billion euros. But Worldline will only get 1.7 billion euros in cash, with the rest in preference shares in the slow-growing subsidiary.
The securities are worth just 600 million euros today. But if Apollo kickstarts the business, which is struggling to grow as payments move online, the preference shares will be valued at 900 million euros. The structure helps Worldline by reducing the loss it must recognise on the disposal to 900 million euros.
For its part, Apollo limits its upfront cash outlay to just 5 times the target’s operating margin before depreciation and amortisation in 2020. The remaining payment to Worldline depends in part on how the business performs. For companies and private equity firms navigating in volatile markets, such creative dealmaking may be the way to match the gap between buyers and sellers.
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