Credit Agricole snaps up 7% stake in JV partner Worldline after 66% stock slide

By Louis Goss

Credit Agricole on Monday said it had acquired a 7% stake in payments company Worldline as the two firms push ahead with plans announced in July to launch a new joint venture payments processing company intended to become a major player in France's financial services sector.

The French bank said its decision to buy a minority stake in Worldline for an undisclosed sum is aimed at strengthening the two firms' "strategic partnership" as they push forwards with efforts to launch their joint venture this year.

The acquisition also follows reports from Reuters last Friday that Worldline was reviewing strategies created by banks at Morgan Stanley and Rothschild & Co to defend itself against a possible hostile takeover led by those seeking to take advantage of its recent share price slump.

Shares in Credit Agricole (FR:ACA) increased 1% on Monday having risen 26% over the previous 12 months. Worldline (FR:WLN) shares were up 4% on Monday having lost 66% of their value over the previous year.

Shares in Worldline previously collapsed last October after the Parisian company cut its financial targets, while warning the economic slowdown in Europe had hit its bottom line.

In December, Bloomberg reported Credit Agricole was considering buying a stake in Worldline in a bid to stabilize its struggling strategic partner following the share price drop.

The two firms' strategic partnership is set to see them invest 80 million into launching their own joint-venture payments processing company, with a view to capturing a major share of France's growing electronic payments market following the signing of a binding deal in July.

The July deal saw them agree to join forces to create a new company they hope will become a top player in France's payments processing sector, using Worldline's technical expertise and Credit Agricole's reach and scale.

In launching their own payments processor, the two companies are aiming to capitalize on the shift from cash to cards in the eurozone's second largest economy. Cash is still used to make around 40% of all payments in France, according to data from Worldline.

Credit Agricole, which is currently France's second largest bank in terms of assets, said it now intends to remain a long-time minority shareholder in Worldline, as it said its decision to acquire a minority stake in its partner signals its confidence in its capabilities.

Credit Agricole said the acquisition is expected to have a less than 10 basis point impact on its CET1 ratio.

-Louis Goss

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01-22-24 0535ET

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