Vantiv, a U.S.-based payments processing and technology provider, and Worldpay, its counterpart in the U.K., have reached “an agreement in principle on the key terms of a potential merger,” reports Paybefore sister publication Banking Technology. Additional reports put the value of the merger at $10 billion, with rival bidder JPMorgan Chase having until Aug. 1 to make a counteroffer.
Vantiv has been around since the 1970s (it used to be called Fifth Third Processing Solutions) and is one of the largest merchant acquirers in the US today. It employs 3,600 people and processes around 20.1 billion payment transactions collectively worth $726 billion per year.
Worldpay was founded by Nick Ogden in the late 1980s (Ogden has recently embarked on a new venture—a clearing bank in the U.K.). It was sold to RBS in 2002, and later to private equity firms Bain Capital and Advent International.
In 2015, Worldpay was floated on the London Stock Exchange (LSE)—the largest London IPO that year.
Last year, Worldpay recorded the revenues of £4.5 billion and operating profit of £389.2 million. The company employs 5,000 people.
If the Vantiv-Worldpay merger goes ahead, Worldpay shareholders would own approximately 41 percent of the share capital of the combined group on a fully diluted basis.
The total value to Worldpay shareholders would be £3.85 (US$4.97) per Worldpay share.
Worldpay shares will be delisted from LSE. Common stock in Vantiv, which will be the ultimate holding company of the combined group, will continue to be listed on the New York Stock Exchange.
There is “compelling strategic, commercial and financial rationale for combining Worldpay and Vantiv’s complementary businesses,” the two companies say.
The new entity will operate in “the four core regions of the U.S., Europe, Asia-Pacific and South America.”
It will be led by Charles Drucker (currently president and CEO of Vantiv) as executive chairman and co-CEO, Philip Jansen (current CEO of Worldpay) as co-CEO, and Stephanie Ferris as CFO (Vantiv’s CFO at present).
The boards of the two firms “have identified substantial opportunities for cost synergies, which support significant potential shareholder value creation.” There are also “additional revenue growth opportunities.”
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