Nuvei (TSX: NVEI) shares spiked on Monday by as much as 26% after news came out the company was fielding offers to go private. The Canadian point-of-sale (POS) company, backed by actor Ryan Reynolds, is now in advanced talks with private equity firm Advent International for a buyout.
While a deal could be announced soon, what should investors think of the proposal? Let’s get into it and determine if it makes sense to buy it before a buyout.
What happened?
While a deal might be on the table, there is still a chance it could fall apart for the POS company. The payment services company provides these services to the sports betting industry, with a market cap currently at $5.17 billion, a huge jump from the $4.1 billion before market open.
Nuvei stock went on to respond to the report, stating that its confirms rumours that it’s in talks to go private. However, that it’s also in talks to involve continued ownership by holders of multiple voting shares. This would include Phil Fayer, Nuvei stock’s founder, chair and chief executive officer.
However, it went on to state that it has yet to enter into any agreement. So, as mentioned, this situation could still all fall through. For now, this is all we know, with Nuvei stock stating no more comments will be made unless a deal goes through.
When we could expect a deal
Now that the cat’s out of the bag, investors are likely to hear relatively soon whether a deal will go through or not. For now, a special committee is in place to evaluate the “expressions of interest” for the firm.
But after such positive responses from the public, Nuvei stock would be hard-pressed to ignore the offer. Even with the climb, it’s important to note this came after shares dropped significantly in the last year. Shares are, in fact, still down by 47% in that time as of writing. So, if you’re bullish, then perhaps investors may believe that there is more growth to be had from the company.
The drop in share price wasn’t just from market performance, but a short seller report that went after the company. Spruce Point Capital Management in particular questioned the company’s US$1.3 billion acquisition of payments platform Paya Holdings in 2023.
The Ryan Reynolds connection
Granted, it’s interesting that Ryan Reynolds financially backs the company. However, overall this likely will have very little to do with any decisions made about whether to sell the company. That being said, it’s interesting to note that this Mint Mobile wireless provider was acquired by telecom giant T-Mobile earlier this year.
What’s more, Nuvei stock has gained more interest after creating a partnership deal with software company Adobe for payment technology access. This was after yet another deal with Microsoft last year to use the tech in the Middle East and Africa.
With so many moves on the table, Nuvei stock is at least going to be one to watch for the next while. Investors will want to watch for analysts’ opinions on whether or not the company is getting a good deal or whether, after all these partnerships, it should hold out for more. Bottom line: If it’s at the table, Nuvei stock is at least willing to discuss a deal, and that could make it open to even more offers.
