U.S. card firm Vantiv
clinches $10 billion deal to buy Worldpay
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[August 09, 2017]
By Pamela Barbaglia
LONDON (Reuters) - U.S. credit card
processing company Vantiv moved closer to creating a $29 billion global
payments powerhouse on Wednesday with a formal offer to buy Britain's
Worldpay for 8 billion pounds ($10 billion).
Vantiv's move is part of a wave of payments company mergers around the
world as consumers are moving away from cash transactions to smartphone
or mobile payments and the industry, once a backwater of banking, faces
growing competition from newcomers trying to disrupt the way merchants
Recent deals have included British payment firm Paysafe Group backing a
3 billion pound takeover offer from a consortium of Blackstone 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
The combined Worldpay and Vantiv, which were both spun out of banks and
have thrived in their home markets, will be called "Worldpay" and
headquartered in Cincinnati, with a primary listing in New York and a
secondary one in London.
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 business at 397 pence
"Our combined company will have unparalleled scale, a comprehensive
suite of solutions, and the worldwide reach to make us the payments
industry global partner of choice," Vantiv's president and CEO Charles
Drucker said, adding that the deal will bring benefits in terms of size
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.
Vantiv is paying a premium of 22.7 percent to the closing Worldpay share
price of 320 pence on July 3, the last business day before the offer
period started, and has proposed a "mix and match" facility which allows
Worldpay shareholders to vary the proportion of shares and cash they
The company's international operations will be run from London, but
there will be no formal guarantees for jobs in Britain where Worldpay's
UK division employs about 1,200 of its roughly 5,000 total. Worldpay is
Britain's biggest payment provider, processing about 31 million mobile,
online and in-store transactions each day.
The combined company will process some $1.5 trillion in payments and 40
billion transactions through more than 300 payment methods in 146
countries and 126 currencies, with a combined net revenue of over $3.2
[to top of second column]
Traders wait for news at the post where U.S. credit card technology
firm Vantiv Inc is traded on the floor of the New York Stock
Exchange (NYSE) in New York, U.S., July 5, 2017. REUTERS/Brendan
"We're creating a truly global platform for expansion," said Worldpay CEO Philip
Jansen, adding the business will rank as the top payment firm in the U.S. and in
Europe and sees scope for additional growth in Latin America and the Asia
The new Worldpay will be led by Vantiv boss Charles Drucker as executive
chairman and co-CEO while Worldpay's Jansen will report to Drucker and act as
Vantiv chief financial officer Stephanie Ferris will become the group's CFO and
report to Drucker.
The combined group will see five Worldpay directors sitting on the board with
Sir Mike Rake, who is Worldpay's non-executive chairman, becoming lead director
of the new board.
The deal, which has been unanimously recommended by Worldpay directors, is
expected to close early next year at the latest with no major regulatory
concerns, Worldpay and Vantiv executives told analysts.
Goldman Sachs and Barclays acted for Worldpay, while Morgan Stanley and Credit
Suisse worked with Vantiv on the deal, which gives Worldpay an enterprise value
of about 9.3 billion pounds and will result in annual recurring pre-tax cost
synergies of about $200 million.
These synergies are expected to be fully realized by the end of the third year
following completion of the merger.
But the combined group is also expected to incur one-off restructuring and
integration costs of around $330 million.
Craig Bonthron, a fund manager at Kames Capital, said that the deal was a
sensible transaction which allowed UK investors to participate in the upside and
would help consolidate "what is a fragmented market and diversify Vantiv's
revenues away from struggling 'big box' retailers in the U.S."
But a top 20 Worldpay investor told Reuters he wanted to speak to Worldpay's
directors because he felt Vantiv's bid undervalued the business, although he
welcomed a secondary listing in London.
"The tweaks (to the initial bid) have been beneficial but the fundamental
questions around valuation persist," he said.
Worldpay said on Wednesday its first-half underlying earnings rose 13.6 percent,
driven by strong growth across all its businesses and tightened costs at its UK
(Additional reporting by Arathy Nair, Simon Jessop and Ben Martin; Editing by
Rachel Armstrong and Alexander Smith)
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