Network International confirms takeover bid

Unsplash/Christiann Koepke

• Network is Middle East’s largest payments provider
• Bid from CVC Capital and Fransico Partners values it at $2.6bn
• Number of M&A deals in Mena region grew 13% in 2022

Digital payments provider Network International confirmed on Monday it has received a takeover proposal from a consortium of CVC Capital and Francisco Partners, valuing the company at about $2.6 billion.

In a statement, the Dubai-based company said the proposal “is at a value that the board would be minded to recommend to Network shareholders”.

The offer is for 387 pence per share – a premium of nearly 28 percent to Network’s last closing price, the statement added.

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Network International, which reported a 42 percent rise in net profit for 2022 to more than $80 million and revenue growth of 25 percent to $438 million, said that the takeover proposal follows a series of bids that were rejected.

The offer for the largest payment processing firm in the Middle East and Africa comes as analysts report that the regional market for mergers and acquisitions is growing at an “unprecedented” rate.

The statement pointed out that the new proposal is “subject to the completion of satisfactory due diligence”. It added that there “can be no certainty” that an offer will be made. 

Network International operates in more than 50 markets across the Middle East and Africa, with a focus on the UAE, Saudi Arabia, Egypt, South Africa and Jordan.

CEO Nandan Mer said previously that it had ended last year “in a position of strength” supported by “structural market expansion and continued strategic delivery”.

M&A growth

The takeover proposal is part of a burgeoning mergers and acquisitions (M&A) market in the Mena region, which racked up 754 deals last year compared with 500 to 600 in recent years.

The EY Mena M&A Insights 2022 report said there had been a 13 percent rise on the 661 deals seen in 2021, although the total value dipped from $99 billion in 2021 to $82.5 billion.

“M&A activity in the Middle East reached new heights last year,” said EY Mena strategy and transactions leader Brad Watson, “testifying to the success of companies adjusting their M&A strategies to the needs of the changing market.”

The surge in M&A activity last year was driven by a boost in investor confidence, which in turn was attributed to high oil prices improving conditions, business-friendly reforms and the easing of travel restrictions, according to the report.

Technology made up 25 percent of the total deal volume as the region – and the GCC in particular – seeks to position itself as a hub for tech startups.

Anil Menon, EY Mena’s head of M&A and equity capital markets, said: “The macro-economic challenges in the US and Europe have triggered a retreat of capital to the Mena region, with government-related entities and regional strategics leading the pack.

“Large cap players are super-active and hunting. The unprecedented volume of deal activity in 2022 is a clear reflection of an exceptionally buoyant deal environment, which we expect will continue in 2023.”