Ladies and gentlemen, good evening. This is Gilles Grapinet speaking. Thank you very much for being with us tonight at short notice, as we are really very, very happy to share with you that Worldline has just signed with one of the leading Australian banks, ANZ, a new major strategic alliance in commercial acquiring. I am going to share this presentation, as usual, with Marc-Henri Desportes, our Deputy CEO, and with Eric Heurtaux, our Group CFO. And now, moving to slide four, I would like to, of course, share with you the key highlights of this very important transaction.
Indeed, this strategic alliance is genuinely a landmark transaction for our group, and I am very honored that Worldline has been selected by ANZ to take over the control of its merchant acquiring business as the long-term partner of choice to deliver state-of-the-art products and services to its very large portfolio of merchant customers through the creation of a joint company. I would like to summarize this alliance with four words: scale, complementarity, reach, and partnership. Scale, first, because this strategic alliance enlarges significantly Worldline Merchant Services footprint. ANZ merchant acquiring is actually a very sizable business, as it will allow us to grow strongly our acquired volumes by circa 20%, up to EUR 400 billion, and to enlarge our merchant portfolio by circa 80,000 new merchants to reach 1.1 million.
Complementarity, second, because the perfect fit between the power of the ANZ local distribution network and footprint, combined with Worldline's technological payment stack and business expertise in payments, are the foundations of a very strong growth and synergy plan. This complementarity will, in particular, allow a strong improvement of the profitability of our joint operations in Australia, thanks to the synergies we will extract from that combination, completely in line with the magnitude of past synergies delivered in previous acquisitions, such as Equens or SIX Payment Services. Third, because this alliance highlights Worldline's ability to strike major partnerships, not only in Europe, but also now globally. It is a proof point of the relevance of our global expertise in payments, more and more recognized, and to be able to provide powerful and scalable offering and state-of-the-art payment technology stack.
Last, partnership, as this alliance is the first success of our newly created go-to-market, MSFI, Merchant Services for Financial Institutions, leveraging the competing strengths of the Worldline Ingenico combination. Moving forward, I would like here to also summarize this long-term and exclusive joint venture, which is based on a shared vision for delivering value to the Australian merchants through the combination. On one side of the Worldline global scale, best-in-class payment solutions, recognized sales and marketing capabilities, and also successful track record for integration and migration. And on the other side, of the ANZ's leading position in Australia with a large bank distribution network, local expertise, and strong merchant relationship with many adjacent banking products. This perfect match is a pillar of a powerful engine to deliver a steady growth with profitability improvements, and more importantly, to create value for our merchant consumers.
I am sure that you recall the slide presented by Marc-Henri during our Q3 2020 revenue presentation. I will not spend too much time on it, as you probably already know it and recognize it. But end of October, we have presented to you our new global Merchant Services organization with now four dedicated vertical go-to-market business units. Out of which, the one called MSFI, Merchant Services for Financial Institutions, that you can see on the right, and that we had qualified at that date of being our new operational arm to respond to the growing appetite from financial institutions for tailored partnerships in acquiring. And this alliance confirms, indeed, the relevance of Worldline's ambition to be the new partner of choice for banks through this newly created business unit, under the leadership of a dedicated team, fully engaged to roll out our bank partnership model.
Indeed, merchant acquiring activities are critical for banks, but it comes along with more and more challenges, such as new ways for delivering new, customer engagements, reach, need for further scale, accelerated innovation, and of course, the ability to constantly find the right partners to develop their activity. Financial institutions' repeatable blueprint model, leveraging the compelling combination between Worldline and Ingenico, is there to provide to banking partners an ideal all-in-one solution, combining best-in-class payment expertise, successful track record in seamless integration and migration from Worldline, recognized now in synergies extraction, a very sound governance framework with aligned principles and strong risk management, and of course, backed by Worldline's global reach with scale and competitive cost structure.
To conclude on that slide, through this dedicated go-to-market, Worldline has now the ability to respond to this strong appetite from banks for this type of tailored partnerships, and to develop market-winning banking alliances and joint ventures in Merchant Services. Thanks for your attention so far, and I now leave the floor to Marc-Henri for a description of the business benefits of the alliance and the value creation levers, and I will come back later, after Eric, for the conclusion and opening the Q&A.
Thank you, Gilles, and good evening to you all. We are indeed very proud to announce this strategic alliance in an attractive market, benefiting from a strong momentum in digital payments. Let me start with a global overview of the Australian market. Australia is a very dynamic and attractive market. It is the 14th largest economy in the world, and the 5th largest in Asia. It enjoys a robust economic performance, with a low unemployment rate and limited public indebtedness, sustained by its consistent policy frameworks, strong institutions, attractive investment environment, and deep trade ties with the Asian region. Regarding the payment industry, Australia shows favorable dynamics and a sizable and growing addressable market, driven by high card penetration and strong adoption of digital payment, and a high level of readiness and receptiveness towards cashless payment methods.
Very close to Europe in terms of, market structure, payment standard, and technology, the Australian payment market is large and dynamic. It has a strong level of adoption, adoption of electronic payment, with the consumer use of contactless card and digital wallets among the highest in the world. Furthermore, with the card usage growing 10% since 2010, the Australian market offers an attractive growth opportunity, driven by the shift from cash to card. This trend has accelerated during the recent COVID-19 pandemic, driven by a temporary contactless payment threshold improvement from AUD 100-AUD 200. Mobile payment solution promoted by banks and increased use of online shopping seems likely to become a permanent shift. I will now detail ANZ merchant acquiring activities on the next slide.
ANZ is one of the top four retail banks of the continent, and is among the strongest leaders on its market, having generated circa EUR 180 million in revenue, of revenues in 2020, with an OMDA percentage around 20%. ANZ commercial acquiring unit is the third largest payment acceptance/acquiring player in Australia, with a market share of approximately 20%. It has processed 2 billion transactions for, purchase acquiring volume of EUR 74 billion, and it owns 80,000 merchant relationship, in-store and online altogether. With an experienced team, having a deep country and sector knowledge, ANZ has developed a prominent customer base, spanning from SMEs to large customer. This merchant customer base shows strong retention rates and are diversified, both geographically and by vertical.
It will be the basis of our development through cross-sell and upsell opportunities, on top of the ANZ's capacity to leverage with the support of ANZ, the existing wider bank merchant base. But last but not least, it is clearly the talent pools who are joining Worldline, 200 payment specialists from ANZ, which owns the new entity. This talent pool will bring local expertise and deep know-how, representing a strong success factor in the future development of the joint venture. Now, moving to the value creation levers, coming from the combination of our two groups. The combination of ANZ's strong market position and Worldline global scale, best-in-class technologies and payment expertise, will allow the alliance to grow revenue at a double-digit rate in the coming years, and deliver strong synergies. This performance will come from scale and local levers.
The scale levers are mainly driven by Worldline's ability and know-how to duplicate our existing technology payment stack, based on our IP-owned payment solution. A high reuse rate of Worldline modules in a country presenting a high degree of similarities with the European market. So in a nutshell, the platform is largely the same as the one we have in Europe. A deep know-how in hypercare customer migration, a very strong portfolio of innovative solution, providing a high level of value-added services, such as digital onboarding, omni-channel, and others that you can see on the slide. A global solution delivery with local support for specific customizations that we can then roll out globally, and the power of our e-com platforms, allowing us to deploy efficient and performant online solution.
To deploy with success with this full payment stack, we will rely and leverage the Worldline's local staff and management structure, which is close to 300 people in Australia, primarily from the former Ingenico perimeter. Furthermore, a robust integration and platform development program will be implemented at closing, with the objective to reach EUR 25 million additional OMDA by 2025, enabled by the reuse program I have just described. Post-migration, the Worldline IP-owned platform will deliver strong operating leverage from an enhanced scale, with more than 2 billion additional transactions per year to be processed coming from this operation.
...Thank you for your attention, and I leave the floor now to Eric, who will present to you in more details the governance framework and the transaction highlights.
Thank you, Marc-Henri, and good evening to you all. Our alliance with ANZ is materialized by the creation of a joint venture, which will be controlled by Worldline at 51% and is set for a 10-year period, after which Worldline will have a call option to buy back ANZ share in our joint company. Regarding the nomination of key managerial positions, Worldline appoint the CEO and COO of a joint venture in a process shared with ANZ. Operationally, as described by Marc-Henri, the operating model will be similar to the one we have designed for the group in order to execute a seamless integration. Let me now move to the transaction highlights. Worldline will buy ANZ merchant acquiring activity based on an enterprise value of AUD 925 million, representing around EUR 570 million.
It represents a cash consideration of around EUR 300 million at closing for a 51% ownership. In terms of acquiring multiple, you can notice that the implied EV to EBITDA multiple is below the current Worldline valuation, highlighting our capability to execute value-creative operations at attractive multiples. Let me now detail the impact of the transaction on Worldline financial profile. With a revenue of EUR 180 million, we expect in the coming years a double-digit annual organic growth rate. In terms of profitability, the current 20% EBITDA margin is expected to catch up with Worldline Merchant Services profitability, fueled by EUR 25 million synergies and operating leverage. The cost of implementation of the synergies is expected to be circa EUR 25 million. And lastly, post-closing, the group will have fully maintained its financial flexibility for further development. A word on the considered timeline.
The transaction is expected to close during the fourth quarter of 2021, with a full leadership team appointed and our day one readiness program implemented and ready for execution. We expect then the launch of a new commercial acquiring platform in the course of 2022, with a progressive ramp up until 2024, enabling the full transfer of the merchant portfolio and the decommissioning of a legacy system. I now leave the floor to Gilles for the conclusion.
Thank you, Eric and Marc-Henri, and it is now time to conclude this short presentation that we wanted to share with you, so you capture all the key highlights of the important movement of Worldline in the merchant acquiring global landscape. I have actually four key messages that I would like to keep, that you to keep in mind on the back of this announcement. The first one is that this alliance provides to Worldline a very powerful access to an attractive market, with a very significant market share and very meaningful acquiring volumes, as you could see. It represents, as such, a unique, genuinely unique value creation opportunity, as ANZ is a first mover in the Australian market, as a bank, opening this type of strategic alliance with a pure player, and we are very proud again that they have been choosing Worldline.
It offers consequently also strong synergies through the rollout of the Worldline Payment Stack. It highlights our capacity, more generally, to build long-term alliances with leading banks, and of course, not only in Europe, but now clearly beyond, while maintaining our financial flexibility. And lastly, I believe it demonstrates the relevance of our new organization, in particular, our new business unit, Merchant Services for Financial Institutions, that is in a position now to open the door to further joint ventures and alliances. We are absolutely convinced that this strategic landmark transaction is a cornerstone for Worldline's positioning as a new global payment partner of choice for banks in Merchant Services. Thank you very much for your attention, and I am now ready with the team to take your questions.
Thank you very much. As a reminder, if you'd like to ask a question, please press star, then one on your telephone keypad and wait for your name to be announced. You can cancel the request by pressing the hash key. Once again, star, then one if you'd like to ask a question. The first question today comes from the line of James Goodman from Barclays. Please go ahead.
Well, good evening. Thanks very much. Yeah, just firstly, on the regional opportunity here. So I mean, I think you mentioned that Ingenico has some exposure already in the region, I think in New Zealand. And then I think ANZ maybe even had some ownership in that business previously. But I mean, the question is, is there exclusivity around this, or do you really see that this is such an attractive region that actually you could well bolt on sort of further deals here? And the second question is just again, linked to the region, Australia specifically. Are there sort of regulatory drivers here as well behind the sort of cash to non-cash trend? I think there was some talk of taking interchange all the way down to zero at one point in Australia.
I don't know where that got to, but, but just interested in the sort of regulatory environment. And then thirdly, and just as a, a sort of, an aside really, Gilles, but, I'm sure we'll get the question around the deal pipeline beyond,
... these sorts of deals, I mean, Worldline's reached a sizable, sort of market cap now. This is a reasonably sort of manageable deal size in the context of the overall. So maybe just a quick comment on sort of the larger deal, sort of pipeline, maybe closer to home as well. Thank you.
Hello, James. Good evening. Thank you for your question. I will hand over the first one to Marc-Henri, and I will take the one on M&A for sure. Marc-Henri?
On the exclusivity, clearly, the logic of such a partnership with a premier bank in Australia is to be exclusive for the Australian market. So there is no ambiguity there. We partner very strongly with such a bank as ANZ, and we are very honored to be their partner. This being said, it is targeting Australia, so at this stage, New Zealand is not part of the scope. And you recall correctly that ANZ was a former shareholder of Paymark, and but these are separated topics. So it's really a logic of exclusivity.
Regarding the regulatory environment, I say there are similarities with Europe, and in fact, the debates are similar as well, and there have been pressures on the interchange, logically, rightly so, and developing further debit cards, new alternative payment methods on this market. So there are a lot of things to which we are very well accustomed. But I think the most prominent element in this recent period is the possibility to increase the threshold of contactless payment, and it has really boosted the support to entering payment in this market in the year 2020, yeah.
To the extent that, given all that you've seen on the market and the strong pressure that there was, this business did not decline, managed roughly a stable level of revenue throughout this year, which is a real and strong achievement in this sanitary and health context.
Indeed, James, and regarding M&A, definitely, I think what is really important to highlight on the back of this transaction is that actually the pipe for such bank-related deals is actually strong, as more and more financial institutions are currently initiating similar strategic initiatives than the one driven by ANZ as the first mover here in the Australian market. So we definitely see and expect to see confirm refresh momentum with some of these processes to actually develop successfully, led by these banks in 2021. And this is the whole point of having created this MSFI business unit, to have a full bandwidth, M&A bandwidth, to work on these deals, like a second specialist M&A/partnership dedicated team, while the central M&A team is more focusing on, I would say, transformational M&A.
So definitely also, you can see this transaction as after Payone inherited from Ingenico and expanded with the Worldline asset, as really a second very important proof point of the fact that Worldline here is clearly extremely active on this front of specialist M&A transaction related to merchant acquiring, while, of course, still pushing for more transversal, I would say, more transformative transactions. But I think both streams are very important here in our M&A story, as there are many geographies where it makes absolute sense to enter in partnership with a leading domestic bank, like it is the case here with ANZ.
Yeah, that makes perfect sense. Thank you.
Thank you very much. The next question today comes from the line of Hannes Leitner from UBS. Please go ahead.
Yeah.
Yes, thank you for letting me on, and congrats to the transaction. I got also a couple of questions. The first one is, can you talk a little bit about the rationale from ANZ side, why this arrangement doesn't include New Zealand? And then also, what is kind of expected from you on your side? Is it all just purely technology, and/or you really will, for example, also transfer people over there? That's the first question. Then the second one is, is kind of on the e-commerce exposure. Maybe you can talk there in terms of the local market and putting ANZ in context to that. And lastly, is there any opportunity or any engagement planned on the financial service side, from that arrangement, but maybe also in that market?
Hello, Hannes. Thanks for your question. Good evening. Regarding the rationale for ANZ, ANZ is a bank which is actually delivering a large-scale transformation program within which, under the steer of Shayne Elliott, the CEO, a significant redefinition of the portfolio of activities has been led, in particular with many businesses sold to refocus the bank on what they define as really core activities. Within this decision strategic reprofiling of the bank, clearly, they came to the conclusion that merchant acquiring was an important business for them, but that they were not needing to own it to actually deliver good services to their merchants.
On the contrary, that they could benefit from a dedicated partner to improve the quality of the products and services to their merchants, while still keeping an opportunity to cross-sell adjacent banking products, and at the same time, extract the value of their large merchant portfolio that was built over years in Australia... It also, why only Australia and not New Zealand? Because at this moment in time, this is clearly the market on which they saw that there was the most important and most important need to try to get to a first mover advantage by partnering with a dedicated player, pure player like us, and I believe it is their rationale for the time being. This is for your question regarding their rationale for what we know. Marc-Henri?
On your question about do we bring on the technology, no, clearly, it is not only about technology, and we have of course a technology stack and the various scope of products. But it is also about bringing the expertise, know-how, and knowledge in terms of having a strong focus on developing sales campaign, verticals campaign, vertical selling, all on know-how in selling and developing the business will complement the one of ANZ and its knowledge of the local market and their own team. So yes, we will train them. Yes, we will add new layers of sales development. So yes, we will increase significantly the sales effort to develop further the business, and all this will be part of the project.
In terms of e-com, the portfolio is not particularly e-com centric. But this being said, there is exposure, and we have some income e-com position in Australia, coming from the Bambora side of Ingenico. So we have some knowledge of the market, you see, and this was developing, but could develop now much further, leveraging this acquiring position, this new list of merchants to sell business to. And clearly, for our global platforms, such as Global Online, the fact to have a very strong acquiring position in Australia will be an opportunity to complement the online offer in a combined gateway collecting and acquiring offer to serve particularly well this market for global players.
So all these dimensions will clearly help and support the e-com development on this market, as we are doing across the board on all our activities. As you know, we have now an increased e-com exposure with the Ingenico acquisition, integration inside the Worldline group. Regarding FS engagement, that will be a topic for further development on our side, to leverage this relationship, to see if some financial services could be of interest to the market, and it's absolutely not excluded at this stage.
Thank you.
Thank you very much. The next question today comes from the line of Alexandre Faure from Exane BNP Paribas. Please go ahead.
Hi, good evening. Thanks for letting me on. I had a couple of questions, if I may. One is on this business on organic growth. So you commented on 2020 being a flat year for ANZ commercial acquiring in Australia, which indeed is quite an achievement. But before that, you know, were they already growing double digit? Or in your outlook, you include some benefit from revenue synergies? That'd be my first question. Second question relates to perhaps the role that Ingenico played in this combination.
I don't expect it was much considering the timing of both deals, but just checking if having the Ingenico assets helped you perhaps understand a bit better the Australian market, and whether to some degree this deal makes you reconsider your stance on Ingenico's payment terminal business. Thank you very much.
Hello, Alexandre. Good evening. Marc-Henri will probably take your first question. I will take the second one.
Yeah. So, not going too far away back in time, the business was growing nicely before the COVID impact. Not double digits, but nicely and clearly, it is through the momentum of the synergies and the strong collaboration of the alliance mechanism that we will bring it to a double-digit level. Clearly, that is our plan.
Regarding your second question, as a matter of fact, as you know, the Ingenico announcement took place early February 2020, so literally 11 months, more or less, back. And so, in the course of this process, we've been, of course, elaborating a lot, once we were in the competitive phase, on this process, of all the benefits that were also coming on top of the historical standalone Worldline portfolio that were to come from the combination with Ingenico. So definitely, I believe that, in the decision-making process of the bank, the fact that Worldline was to merge with Ingenico has definitely played a role.
It's why we also believe that, this alliance that we announced today is also reflecting the compelling nature of the, combination between Worldline and Ingenico in terms of portfolio reinforcement in online, as you know, and in commerce in general. Extreme capacity to deliver value-added services and specific recipes for,
... developing the SMB side of the market, thanks in particular to Bambora's products, know-how, and methodology. So all that has definitely reinforced our competitive positioning from an offer and product standpoint. Not that much the terminals, which has played a role here, but much more, I would say, the retail part of Ingenico, combined with the MS part of Worldline. And it does not change at all our strategic review on the terminals, which is developing week after week, as anticipated.
This is very clear. Thank you very much, Paul.
Thank you very much. Once again, as a reminder, if you'd like to ask a question, please press star, then one on your telephone keypad. The next question today comes from the line of Paul Kratz from Jefferies. Please go ahead.
Hi, good evening, everyone. Maybe just starting with a strategic question. When I look at the, this deal here and the impact I guess it would have on Ingenico, and I guess you guys getting an acquiring license in Australia, how should we think of, of the profit share, let's say, a deal that would be struck in Global Online, but then you would basically do or leverage the acquiring license of ANZ to do full-stack acquiring? Is that something? Was that a profit that would basically go through the joint venture, or is that something that would go directly to the Global Online business? And then maybe just kind of two kind of admin questions. You know, firstly, on the funding of the deal, is there any color that you could potentially give on it? And then maybe on the synergies as well.
I appreciate you guys talked also about the platform side, but is there any incremental commentary you can give in terms of the sources of the synergies?
So thank you. Hello, Paul, good evening. So maybe, Marc-Henri, for the question related to the platform and the license.
Clearly, indeed, there will be an acquiring license in Australia inside the joint venture, so own 51% Worldline and 49% ANZ. And all local acquiring flows will be processed through this alliance, and we'll share the benefit according to the shareholder structure. When it comes to volumes coming from Global Online, we make sure that we have a proper arm's length relationship. And so there will be the fair share of the acquirer in Global Online and the share of the local acquirer in the alliance. And this, I think, it's the overall logic that we will respect in the profit sharing. I think-
On the second topic related to the funding, it's a bit early at this stage, but we do believe that unless the situation changes until closing, we would most likely finance it through available cash in the context. So that should definitely not be an issue. On the second topic, which is related to the source of synergies, you probably understood we, there are two main drivers. First one, which is the reuse of the platform solution and IP from Worldline.
That's definitely the critical aspect, but also the top line impacts through the double-digit growth and the innovation that Worldline will bring to the JV as well for innovative products. We mentioned online that there are many of them, so that's also definitely a significant part of our plan.
So I think this was set to be a thirty-minute call to make sure that you could really. And again, sorry for the short notice, of course, but many thanks for the one that could make themselves available. I just thank you also for your questions. As a matter of fact, I want you to keep in mind that for us, it is really an important moment, as this is really first bringing to Worldline huge volumes. It is definitely a very sizable business that is going to join the company with a very significant growth potential ahead. Large synergies, which are perfectly in line with the metrics we are used to deliver through previous deal by reusing the Worldline core platform in this new geography.
Which is, in the end, very similar to Europe by many aspects, but with a better macro environment and a very strong and well-managed pandemic situation. So this is really a great day. We are super happy, to be frank, and we are in full speed in motion to bring some further deals of this kind in the company in the coming quarters. Guys, many thanks. I wish you a very good evening, and see you soon. Bye-bye.