French bank Credit Agricole announced on Monday that it has acquired a 7% stake in Worldline, a move aimed at strengthening the payments group following a significant drop in its share price over the past year.
This development comes after reports in December indicated that Credit Agricole was exploring the possibility of acquiring a stake in Worldline.
Worldline, a Paris-based payments firm, reacted positively to the news, with its shares surging by more than 5% in response to the announcement.
In recent weeks, Worldline had taken proactive steps by enlisting the services of financial advisors to develop a defense strategy, ensuring the reassurance of its shareholders and preventing any potential hostile takeover, as reported by Reuters.
These financial advisors had been in discussions with various potential investors, particularly French financial institutions, to gauge their interest in taking up a minority stake in Worldline.
The need for such measures arose as the value of Worldline’s shares suffered a significant decline in October, primarily due to the company’s decision to revise its financial targets.
This revision came in the wake of heightened scrutiny by German regulators concerning the effectiveness of Worldline’s money-laundering controls, coupled with the adverse effects of an economic slowdown in Europe on the company’s operations.
Credit Agricole emphasized in its statement on Monday that the acquisition of the 7% stake in Worldline was intended to reinforce the partnership between the two companies, which they had agreed upon the previous year.
This move underscores Credit Agricole’s commitment to supporting Worldline in the development and execution of its strategic plans as a key player in the European payment services sector.
As part of their joint venture, Credit Agricole and Worldline are set to tap into the substantial market of 700 billion euros ($767.6 billion) in merchant sales in France.
This initiative aims to cater to the increasing shift in customer preferences from cash transactions to card payments.
Credit Agricole has confirmed that operations related to this joint venture are scheduled to commence later this year.
Worldline expressed its appreciation for Credit Agricole’s investment, characterizing it as a significant milestone in the evolution of the European payment market.
This move is expected to bolster Worldline’s position and capabilities in an industry undergoing dynamic changes and technological advancements.