Dealmaking in the United Kingdom may be getting a boost in the wake of Brexit and in the wake of the fall in the pound.
In the payments arena, Worldpay may be the beneficiary of both currency moves and strategic intent from some of its U.S. peers, eyed as a takeout target in a world where digital payments are gaining traction.
U.S. multinational banking and financial services holding company JPMorgan Chase has reportedly made an early-stage bid for the acquisition of U.K. payment company Worldpay Group. It could be one of the largest deals JPMorgan has completed since the financial crisis of 2008.
According to a news report in the Wall Street Journal, Worldpay’s board said it received preliminary offers from JPMorgan Chase and U.S. credit card processor Vantiv. The board said there was no certainty an offer would materialize, and that the two suitors have until August 1, 2017, to announce whether they will make an official offer.
JPMorgan Chase declined to comment on the WSJ report and Vantiv wasn’t available by press time to comment. The report noted that Worldpay processes millions of in-store, online and mobile phone payments in the U.K. and U.S. daily. Before the approaches by would-be suitors, the company had a market valuation of $8.24 billion. Shares rose 22 percent following news of the potential offers.
The WSJ noted payment companies have recently been attractive takeover targets as banks and payment companies reorganize to ensure they are providing consumers with mobile-friendly payment options. FinTech Nets A/S, Worldpay’s European rival, said last week it had been approached by potential buyers. In April, Mastercard got the nod from regulators for an acquisition of payment technology company Vocalink for around $920 million.
JPMorgan Chase has an existing European payments business headquartered in Ireland and processes approximately 40 million credit and debit card transactions per day. JPMorgan Chase — along with other banks — has long bet customers would move toward paying via mobile devices.
In 2015, it announced it was reworking Chase Pay to better compete with digital payment companies like PayPal. The company has also inked deals with retailers in the U.S. to drive adoption of its payment app.
Separately, the Financial Times noted that a linkup between Worldpay and JPMorgan, or Global Payments, or Vantiv, remains compelling. In Vantiv’s case (where the company has floated an all stock deal), there’s the lure of international scope, as the company would get the chance to boost its presence beyond US shores.
As always, and as pointed out by the FT, regulatory concerns are part and parcel of cross border transactions, and Vantiv might satisfy those concerns by keeping Worldpay operations in the U.K. relatively intact.
Along another line of thinking, the deal would be a palatable one for a firm like JPMorgan, where international presence is more pronounced but where financial firepower is hardly dimmed by snapping up a $10 billion market cap firm. The FT notes that JPMorgan has a market cap of its own that is several multiples higher than that, of course.
Here’s other grist for the mill. Might a bidding war develop? The same FT article, quoting a Wall Street sell side analyst, notes that some parts of Worldpay, such as its unit focused on international payments, eCom, could entice PayPal and others.