Shareholders of Brazilian software firm Linx have agreed to back an acquisition offer from NASDAQ-listed payments processor StoneCo.
The transaction is valued at 6.8 billion reais ($1.28 billion), making it one of the largest ever deals involving a Brazilian technology company. The approval of 63% of Linx’s shareholders for the takeover offer ends a bidding war that saw StoneCo competing with Brazilian ERP giant Totvs since August.
Linx is a Brazilian company specializing in technology for the retail sector. According to analyst firm IDC, it holds a 45.6% market share in the segment. Publicly traded in Brazil since 2013, Linx was listed on the NYSE in 2019. The company has more than 3,500 staff distributed between its headquarters in São Paulo, 15 offices throughout Brazil and five countries across America.
After sealing the deal, StoneCo will use the acquisition to evolve into an integrated provider of systems and payment services. In addition, the combined group will also allow StoneCo to move beyond its current small and medium-sized client base and win over business from the large companies Linx already serves.
From the the start of the negotiations between StoneCo and Linx, which later included Totvs, the deal was surrounded by controversy, due to the amounts involved, as well as the non-compete agreement and the amounts that would be paid to Linx’s founders as a result of the deal.
The deal emerges at a time when competition in the sector increases and new technologies – such as the instant payments platform PIX, launched earlier this month by Brazil’s Central Bank – are transforming the payments industry in the Latin American country.
After the completion of the deal, Linx will become a new software business unit for StoneCo, led by executives from both companies. The operation now requires regulatory and antitrust approvals: the payments processor expects the analysis should take between three to six months.