BERLIN (Reuters) – the japanese Softbank Group Corp is buying a 5.6 per cent of the shares in Wirecard for about 900 million euros ($1 billion), the German company said on Wednesday, joining forces in the digital payments sector.
FILE PHOTO: The logo of SoftBank Group Corp is displayed at SoftBank World in 2017 conference in Tokyo, Japan, July 20, 2017. REUTERS/Issei Kato
Shares in Wirecard jumped from 10 percent to the top of Germany’s blue-chip index analysts welcomed the investment as a vote of confidence in the company that make it possible for the Munich-based company to increase its activities in Asia.
Under the agreement, Wirecard will the issuance of bonds solely to a subsidiary of Softbank, which will convert into 6.92 million Wirecard shares after five years, currently corresponds to 5.6 percent of the company.
The conversion price of 130 euros per share, a 5 percent premium to Wirecard the closing share price on Tuesday. The shareholders vote on the bond issue at the annual meeting on June 18.
Wirecard was founded in 1999, driven out lender Commerzbank out of Germany’s blue-chip DAX index last year benefited from an accelerating global trend in the direction of digital payments driven by e-commerce.
But the shares have shed around 38 percent since the beginning of September, hurt by the negative sentiment towards tech stocks, and reports in the Financial Times, says the staff in the Asian operations had inflated reported revenue.
Last month, Wirecard, said an external law firm to investigate the matter found local employees to the office in Singapore have committed crimes, but these were not relevant for the German payment company into the financial position.
Wirecard and Softbank said that they had also signed a strategic partnership to work together in the area of digital payments.
As part of this, Softbank will help Wirecard expands in Japan and South Korea, and the offer of opportunities to work with other companies in its portfolio in areas such as data analytics/AI, and innovative digital financial services.
“Through this potential partnership, we will expand our reach and products to the East Asian markets, thus further strengthening our position in Asia”, Wirecard Chief Executive Markus Braun said in a statement.
Analysts at Baader Helvea said the investment was a “clear and positive” so the Wirecard better use of the product portfolio in Japan and South Korea, and possibly even accelerate of strong organic growth.
Credit Suisse acted as financial advisors of SoftBank, and Sullivan & Cromwell LLP as legal advisor. Noerr LLP and Gibson, Dunn & Crutcher LLP serve as legal advisors to Wirecard.
Reporting by Caroline Copley; Editing by Michelle Martin/Keith Weir