PARIS: Payments company Worldline agreed on Monday to buy French rival Ingenico in a €7.8 billion ($8.7 billion) deal, creating a European leader in a sector trying to keep up with fast-changing consumer habits and technologies.

The growing use of smartphones for online payments, including through Apple Pay or WeChat, is sparking competition in the industry to develop new, adapted processing systems, often requiring large investments.

The purchase by Worldline, which was born out of French IT company Atos, follows a wave of mergers and acquisitions last year among US rivals also looking to try and build up their share of digital transactions.

Firms in the sector provide everything from the card terminals found in shops to broader services such as transaction security for retailers and banks, and many now want to be present across the whole payment chain.

“We’re likely to see more consolidation,” Worldline CEO Gilles Grapinet told reporters, adding that it was an industry with cost advantages for those operating on a large scale.

The takeover of Ingenico gives the firm an implied equity value of €7.8 billion and would immediately boost Worldline’s earnings per share, with around €250 million expected in savings by 2024.

The price tag implies a premium of about 16 percent to Ingenico’s closing market value on Friday of around €6.7 billion.

Asked about any potential anti-trust regulatory hurdles, Grapinet said the transaction was expected to close “rapidly,” in the third quarter of 2020.

The global payments industry is set to reach $3 trillion a year in revenue by 2023 as more people switch from cash to digital payments for online and store purchases, according to research by consulting firm McKinsey.

In 2019, Fiserv Inc. bought First Data Corp. for $22 billion, while Fidelity National Information Services (FIS) bought Worldpay for about $35 billion, consolidating their positions as the top two players globally.

Shares in Ingenico — which was long seen as a target and drew interest from Edenred and French bank Natixis last year — were up 12.7, while those of smaller rivals like Italy’s Nexi also rallied on Monday amid talk of more sector consolidation.

Worldline shares pared earlier losses but were still 2.6 percent lower, reflecting some concerns that it is paying a hefty premium to buy Ingenico.

On closing the deal, former Worldline shareholders would own 65 percent of the combined entity and former Ingenico shareholders would own 35 percent. Worldline boss Grapinet would become CEO of the combined company and Ingenico Chairman Bernard Bourigeaud would become non-executive chairman.

Ingenico shareholders would receive 11 Worldline shares and €160.5 in cash for seven Ingenico shares, in a primary tender offer. There would also be a secondary offer, with 56 Worldline shares exchanged for 29 Ingenico shares, translating into an offer price of €123.10 per Ingenico share.

Worldline, in which Atos still has a 16.9 percent equity stake, said the deal would give it access to Ingenico’s strong presence in the travel, health and retail sectors, while the combined company would have also have an extended partnership with German savings banks.

The Ingenico division housing its card terminal business, one area where it has struggled more in recent years, will undergo a strategic review, Worldline’s Grapinet said.

Creating a European champion able to compete with bigger American rivals could be welcomed by European politicians.