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Update 6:10pm: Adds Benchmark analyst comment.
Shift4 Payments (NYSE:FOUR) may be worth $130–$138 a share in a potential takeover after a report that Fiserv (FI) and Amadeus IT (OTCPK:AMADF) are competing to buy the payments firm, according to a DA Davidson analyst.
Fiserv (FI) and Amadeus (OTCPK:AMADF) are the main contenders for the company, according to a Reuters report on Wednesday, which cited people familiar with the matter. Shift4 Payments (FOUR) has been running a sales process and final offers are expected to be made in the coming weeks. Shift4 jumped 12% on the report.
Early last year two integrated merchant acquirers were acquired, including Paya and EVO Payments and both deals carried an enterprise value of 15-16 times consensus EBITDA for the next year, DA Davidson's Peter Heckmann wrote in a note on Wednesday.
"Given that Shift4 has generated very attractive growth over the past three years (with best in class margins) and seems positioned to continue to generate strong growth in the intermediate term, we think a takeout multiple would need to be closer to 17-18 times our 2025 adjusted EBITDA forecast of $778M." Heckmann added. "This would represent a potential takeover price of close to $130-$138 per share."
Shift4 Payments (FOUR) confirmed in its Q3 shareholder letter that it was "actively exploring strategic opporunities and alternatives."
"FOUR likely would command a sizable premium to its recent trading levels if a deal were to occur, and such a premium would be required for Mr. Isaacman and the company’s Board to agree to sell, in our view," Benchmark analyst Mark Palmer wrote in a note on Wednesday.
Palmer believes a suitor for Shift4 (FOUR) would likely need to pay 14x forward adj. EBITDA to get a deal done, or about $135 a share, which represents a premium of more than 50% to today's closing price. Palmer has a buy rating and $99 price target on FOUR.
In December, a Raymond James analyst said Shift4 (FOUR) may be worth $90 to $100 in a takeover after a Bloomberg report in December that
Global Payments (GPN) was evaluating a purchase of Shift4 (FOUR). Global Payments denied the report, saying at the time that it wasn't in talks with Shift4 (FOUR) about any transaction.