UK: Worldpay agrees to US$9.9b merger with Vantiv

In a swift denouement to merger speculation that Worldpay, the biggest payment processing firm in the United Kingdom, would be a takeout candidate for some of its largest rivals across the pond, Vantiv and Worldpay said Wednesday that they had agreed in principle on a merger worth about US$9.9 billion.

The deal gives Vantiv greater reach internationally, which had been a point of strategic musings in the financial trade press, and values Worldpay at GB£3.85 (US$4.98) per share. That’s in an all-stock deal that implies a roughly 19% premium to the closing price of the company on Monday, which was a day before it said officially that it had been formally approached by both Vantiv and JPMorgan for a deal.

The deal’s structure means that Worldpay holders would own about 41% of the company post combination. In connection with that announcement, JPMorgan said it would not make an offer. “In response to an invitation from Worldpay, JPMorgan was at a very early stage in considering whether or not to make an offer or the terms of any offer for Worldpay. Following preliminary considerations, JPMorgan hereby announces that it does not intend to make an offer for Worldpay.” However, as noted by The Wall Street Journal, there is an Aug. 1 deadline for a final decision, leaving some wiggle room for JPMorgan to make a counterbid.

In a sign that investors may have been hoping for a JPMorgan tender – and it has been noted that the bank has the financial wherewithal to make an offer multiples above the roughly US$10 billion market cap that Vantiv had sported before Wednesday, Worldpay shares slumped 8% in trading Wednesday morning.

Vantiv and Worldpay stated that, “The potential merger creates a scale world-class payments group in a dynamic market, with deep payments capabilities, product and vertical expertise and strong distribution channels to serve merchants around the world in the global eCommerce market, and in-store and online in the UK and US markets … [there are] substantial opportunities for cost synergies, which support significant potential shareholder value creation.”

In terms of management, the new, combined entity will be helmed by current Vantiv CEO Charles Drucker, to be named executive chairman and co-CEO, along with Worldpay CEO Philip Jansen, also to be named co-CEO. Vantiv CFO Stephanie Ferris will be CFO of the merged firms. The board will have four Worldpay and seven Vantiv directors.

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