Vantiv and Worldpay Clinch Deal

by Raymond Pucci 0

 It’s official—Vantiv and Worldpay are now one. Worldpay gets the name and Vantiv keeps the Cincinnati headquarters. As the following report describes, both legacy acquirers finalized a $10 billion deal after a couple of last minute delays.

U.S. credit card processing company Vantiv secured a deal to buy British-based rival Worldpay for 8 billion pounds ($10.4 billion) on Wednesday in a bid to create a $29 billion global payments powerhouse. Vantiv’s (VNTV.N) move, one of the biggest takeovers of a British firm since last year’s Brexit vote, is part of a wave of payments company mergers as consumers move away from cash transactions to digital payments. Companies such as Vantiv with a strong presence in the United States are scrambling to establish a global footprint in the fast-evolving payments industry.

Shares in Worldpay (WPG.L), Britain’s biggest payment provider, closed 1.28 percent higher at 388.5 pence after Wednesday’s announcement of the deal, which marks the second biggest takeover of a British company this year after China Investment Corporation’s $13.8 billion purchase in June of London-based warehouse firm Logicor.

Other recent deals in the payment sector include Britain’s Paysafe Group (PAYS.L) backing a 3 billion pound takeover offer from a consortium of Blackstone BX. and CVC Capital Partners and French payments specialist Ingenico making a 1.5 billion euro swoop on Swedish rival Bambora.

Although Vantiv’s deal was first announced on July 5, it has taken several weeks to conclude, with the deadline for a formal offer extended twice as Vantiv and Worldpay haggled over governance and safeguarding British jobs.

Worldpay said that Vantiv has offered 55 pence in cash, 0.0672 of a new Vantiv share, an interim dividend of 0.8 pence per Worldpay share and a special 4.2 pence dividend, valuing the former RBS (RBS.L) business at 397 pence per share. Worldpay shareholders will own around 43 percent, while Vantiv investors will have 57 percent of the combined group whose pro forma enterprise value is more than 22 billion pounds.

So now comes the hard part—consolidating two large organizations spread an ocean apart. While Vantiv has assimilated several smaller payments in recent years, this one is different. At first glance, some synergies stand out. Each has different major markets and Worldpay is more the international player, especially in the growing global e-commerce market. But the org chart will need some work given the large numbers of employees at both firms. Additionally, having two co-CEOs is usually not recommended. These are issues that will be worked out over time and ultimately the markets and clients will decide the winners and losers from this deal.

Overview by Raymond Pucci, Associate Director, Research Services at Mercator Advisory Group

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