This Ryan Reynolds-backed company's stock rockets on confirmed buyout interest

By Tomi Kilgore

Canada-based Nuvei said it has held talks about a potential deal involving 'significant ownership' by certain shareholders

Shares of Nuvei Corp. charged up toward a seven-month high Monday, after the Canada-based financial-technology company confirmed that it has held talks regarding a potential buyout.

The confirmation follows a report over the weekend by The Wall Street Journal that said private-equity firm Advent International was in advanced talks about a deal for the payments processor, which is backed by Canada-born celebrity Ryan Reynolds.

The U.S.-listed stock (NVEI) (CA:NVEI) shot up 29.3% in morning trading, which put it on track for the highest close since Aug. 8, 2023. It was also headed for the biggest one-day gain since it soared a record 31.1% on Sept. 17, 2021.

Nuvei said on Sunday while its policy is not to comment on rumors or speculation, it confirms it received a "expressions of interest," and has formed a special committee to evaluate the interest, and any other strategic alternatives that may be available.

The company said it has also been in talks with certain parties, regarding a potential transaction that would involve "continued significant ownership" by certain shareholders, including Founder and Chief Executive Phil Fayer.

According to the most recent 13-G filing with the U.S. Securities and Exchange Commission, Fayer owned 28.1 million Nuvei shares, or 30.8% of the shares outstanding.

About a week after Nuvei's stock plunged 39.4% on Aug. 9, 2023, following the reporting of a wider-than-expected loss and downbeat outlook, movie star Ryan Reynolds said he invested in Nuvei, which he called an "impressive" company with an "exceedingly intelligent" management team.

Reynolds had also invested in wireless provider Mint Mobile, which was acquired by T-Mobile US Inc. (TMUS), and in American Aviation Gin and Wales-based soccer club Wrexham Football Club.

Raymond James analyst John Davis said a buyout by private equity "makes sense," given that the stock was trading at a "depressed" valuation while the company has a "compelling" internal rate of return (IRR).

"[W]e are a bit surprised by the timing as simply executing on the prudent 2024 outlook would likely be enough to send the stock meaningfully higher and improve valuation/sentiment," Davis wrote in a note to clients. "All told, it is not shocking to see PE interest given where valuation is and the compelling IRR math, and we think the probability of a deal reaching the finish line is more than likely."

Nuvei cautioned investors, however, that it can't assure that the talks with potential suitors will lead to a deal.

Nuvei's stock has tumbled 31.9% over the past 12 months, while the S&P 500 index SPX has rallied 31.9%.

-Tomi Kilgore

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03-18-24 1133ET

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