U.S. credit card processor Vantiv has agreed to buy UK-based payment processor Worldpay Group for £7.7 billion ($9.9 billion).
Both Vantiv and financial services firm JPMorgan Chase showed the most interest in purchasing Worldpay, which competes with online and POS payment platforms such as Verifone, PayPal and Stripe. However, the bank declined to make a formal offer.
As much as 50% of Vantiv’s revenue comes from large chains, which have felt the pressure from Amazon’s growth, said Wedbush Securities analyst Moshe Katri in an interview with Bloomberg. Acquiring Worldpay would grant Vantiv access to a more extensive portfolio of smaller businesses and e-Commerce retailers that are proving more nimble in handling competition with Amazon.
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Worldpay supports 400,000 merchants in 126 currencies across 146 countries, vastly widening Vantiv’s global reach. Additionally, Europe is becoming a more attractive market for e-Commerce, which almost certainly has influenced Vantiv to venture into the region. Forecasts from The European eCommerce Report 2017 indicate a projected 14% growth to €602 billion ($684 billion) this year, a figure representing 30% of global e-Commerce value.
The newly combined company’s four core regions of business will be the U.S., Europe, Asia-Pacific and South America. Worldpay shareholders will own approximately 41% of the new company, which will be run by Vantiv CEO Charles Drucker and Worldpay CEO Philip Jansen. Drucker and Jansen will serve as Co-CEOs of the combined company.The Board will have four Worldpay and seven Vantiv directors.
Completion of the merger is subject to shareholder approval, with both companies entering a mutual due diligence process where they negotiate additional terms and conditions attached to the deal. There is an Aug. 1 deadline for a final decision, leaving wiggle room for JPMorgan Chase or another potential party to make a counterbid.
Following the completion of the potential merger, Worldpay shares will be delisted from the London Stock Exchange, while common stock of Vantiv will be held by the combined group and continue to be listed on the New York Stock Exchange.
