Global Blue Acquisition Capitalizes On Consumer X-Border Spend

New day, new multi-billion-dollar deal within the payments space.

To that end, Far Point Acquisition – which operates as a “blank check” company that focuses on financial technology deals – said on Thursday (Jan. 16) that it would buy Global Blue, a payments company based in Switzerland, for $2.6 billion.

The announcement comes on the heels of Visa’s announcement that it would buy FinTech firm Plaid for $5.3 billion.

Global Blue is a company that processes cross-border transactions for international tourists.

Other investors include Alibaba affiliate Ant Financial Services Group, which will invest $125 million and will “accelerate strategic collaboration with the company.”

Third Point, the activist hedge fund, will lead a group of financial investors who will commit an additional $225 million to Global Blue. Of that tally, $100 million will come from Third Point.

Drilling down into the mechanics of the deal – and what happens after the deal is closed – Global Blue said in a release that upon closing, Global Blue will list on the New York Stock Exchange. Silver Lake, the majority owner prior to the deal, will remain a “significant” shareholder. Silver Lake and another firm, Partners Group, will own 42 percent of Global Blue.

Taken together, the $350 million in capital invested by Ant and the group of financial investors values the firm with an enterprise value of about 2.3 billion euros.

The new, publicly-traded company will be incorporated in Switzerland, will trade as “Global Blue” and will sport the ticker GB.

In terms of operations, Global Blue has said that its tax-free shopping technology solutions – which help shoppers claim VAT refunds across 43 countries – serves 13 million international shoppers and 300,000 merchant stores. The company partners with more than 50 merchant acquirers to enhance payments through its added value payment solutions on offer to 16 million international travelers, enabling merchants to accept payments in their customers’ home currencies.

The company said that in its latest fiscal year, which ended in March 2019, it processed 64 million transactions for 29 million international shoppers, and revenues for the firm were more than 400 million euros.

The move into cross-border can be both an opportunity and a challenge for cross-border companies. As noted recently in this space during interviews with executives from Ingenico and Avalara, companies often need help with processing, cross-border settlement and tax collection services as they enter new markets.

The IPO – and Other Attractions

Far Point Acquisition Corp. raised $550 million in its initial public offering (IPO) in June of 2018. The “blank check” concept focuses on pursuing mergers or acquisitions, and operating as “special purpose acquisition companies” to take those acquired firms public.

It should be noted that Far Point’s CEO is Thomas Farley, who had been president of the NYSE and has helped to shepherd listings for financial services marquee names, including Alibaba.

A few trends seem to be converging here. First, there is the continued attraction of listing companies publicly, with an eye toward higher prices paid in the future by retail and institutional investors who still see FinTech as a hot space in which to invest.

The idea, too, of owning or having a financial stake in a firm that makes its home in financial services – and specifically technology – has allure. Don’t forget that investors, beyond looking toward at least some financial reward from share sales, also own a piece of the operations (and cash flows).

The digitization of transactions remains an inexorable trend, and that especially holds true for eCommerce done across borders. As has been seen through any number of earnings reports, such as those from Alibaba or the payment network giants Visa and Mastercard, spending on luxury goods still has legs.

Just two weeks into the new year, FinTech, at least for deal-making, already seems to be a hot spot.