Shares of payments-technology company Nuvei (TSX:NVEI) were up further this week as news the company is going private hit headlines. Shares of Nuvei stock climbed another 3% on confirmation — a total of 13% since rumours started last week.
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What happened?
Private equity firm Advent International agreed to purchase Nuvei stock for an all-cash deal being valued at US$6.3 billion. The deal will take Nuvei stock private, which will then be delisted from the TSX. This comes just four years after having its initial public offering (IPO).
The offer from Advent comes at a 56% premium for Nuvei stock’s last closing price on the Nasdaq before the acquisition came about. So, there is certainly even more growth that shareholders can bring in during the process.
The acquisition of the Ryan Reynolds-backed company is now expected to close either in late 2024 or by the first quarter of 2025. Meanwhile, those with multiple voting shares will roll over much of their investment. Philip Fayer, chief executive officer (CEO) of Nuvei, Novacap Management, and CDPQ will roll over 95%, 65%, and 75% of their shares, respectively. This will reach and expected US$560 million in cash for the shares sold on closing.
Why Nuvei stock is going private
The big question, of course, is why is Nuvei stock going private in the first place? The company, like many fintech companies, has been facing challenges in maintaining growth amongst so much competition and inflation. Going private will allow the company to cut costs as well as avoid the quarterly reporting requirements that come with being a public company.
Furthermore, the acquisition provides Nuvei stock with access to Advent International’s resources, operational expertise, and investment capacity. This can support the continued development of Nuvei stock as well as its global expansion.
So, after surging during the COVID-19 pandemic, with digital payments gaining popularity, Nuvei stock has shrunk in valuation. Concerns and scrutiny will now likely be a thing of the past, at least by the public. Even so, what should investors do now?
What now?
Following the acquisition, Nuvei stock will continue to be led by its current CEO Philip Fayer and be headquartered in Monreal. The other major shareholders mentioned above will also retain significant ownership of the payment company after going private.
Nuvei stock will then aim to capitalize on emerging opportunities in the payments industry, which will include expanding on a global scale. So, shareholders will need to decide whether they want to stay on board ahead of going private or get out. Shareholders who agree to the acquisition will receive a cash payment for their shares of US$34 per share.
That’s great, but if you’re going to wait around, there are certainly issues that could crop up between now and the exit from the TSX. This might include a loss of transparency and a change to the investment horizon with Advent International involved. Even so, now that the US$34 has been announced, this means that investors are pretty much guaranteed that amount. So, if you’re looking for another boost, now could be the time to get in before the official privatization of the Nuvei stock.
