FILE PHOTO: The headquarters of the Italian payments group Nexi are pictured in Milan, Italy, March 28, 2019. REUTERS/Alessandro Garofalo/File Photo

MILAN (Reuters) – The boards of Italian payment group Nexi NEXII.MI and smaller rival SIA will meet later on Sunday and are expected to agree terms for a long-discussed merger, two sources with knowledge of the deal said.

Nexi and SIA, which is controlled by Italian state lender Cassa Depositi e Prestiti (CDP), have been talking about a merger for more than a year and a half, but differences over pricing and governance have proved a sticking point.

The sources said the accord would be an all share deal, with Nexi getting about 70% of the merged company and SIA some 30%. Private equity funds own around 33% of Nexi and this holding is expected to translate into some 23% of the new concern, while CDP should have some 25% in total.

Full terms of the accord are expected to be released before markets open on Monday.

In recent weeks SIA has reached an agreement to keep UniCredit as a client and to extend the contract, removing a major hurdle in determining the company’s valuation in its talks with Nexi, sources said.

The payment sector has seen a wave of mergers and acquisitions, led by U.S. rivals seeking to build up their share of digital transactions.

French rival Worldline WLN.PA agreed to buy local peer Ingenico in February in a 7.8 billion euro deal that will create the fourth-biggest payments company in the world.

CDP has been looking for a deal with Nexi to create a national champion in the payment market and secure important financial infrastructure, sources said.

Reporting by Elisa Anzolin; Editing by Crispian Balmer and Barbara Lewis

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