Vantiv Will Buy Worldpay for $10 Billion as JPMorgan Bows Out

Jul 05, 2017

Worldpay Group (wpg), Britain's largest payment processor, said on Wednesday that it had agreed to be bought by U.S. credit card technology firm Vantiv (vntv) in a deal valuing it at 7.7 billion pounds ($9.95 billion).

The agreement came a day after shares in the British firm soared more than 25% when said it had received approaches from both Vantiv and J.P. Morgan (jpm), though the U.S. bank said on Wednesday it does not plan to make an offer.

The deal, seen by analysts as the start of a trend for consolidation in the payments industry, will see Vantiv give Worldpay shareholders 55 pence in cash per share plus 0.0672 new Vantiv shares plus a cash dividend of 5 pence per Worldpay share.

That makes the total value for Worldpay shareholders 385 pence per share, a premium of 18.9% to the firm's stock close on Monday, but down from the high of 409.5 pence the share price hit on Wednesday before the announcement.

If the deal goes through, Worldpay shareholders will own about 41% of the new company, with the British firm delisted from London's stock market. Vantiv Chief Charles Drucker and Worldpay CEO Philip Jansen will jointly run the new company.

The deal comes less than two years after Worldpay was listed in London in late 2015, when it was valued at 4.8 billion pounds.

Set up in 1989, Worldpay was spun out of British bank Royal Bank of Scotland to private equity firms Bain Capital and Advent International in 2010.

Payments companies have become attractive targets for credit card companies, banks and technology firms seeking to capitalize on the decline in cash transactions and growth in popularity of paying by smartphone or other mobile devices.

While banks have been trying to develop and buy more sophisticated technology, payment service companies like PayPal (pypl) and Worldpay gained a large part of the market share during the e-commerce boom.

Danish payment services company Nets said over the weekend that it had also been approached by potential buyers.

Worldpay's stock, which rose 27.7% on Tuesday, was down 7.8% at 376 pence at 1247 GMT on Wednesday.

Shares in Vantiv, which has a market capitalization of $12.32 billion, were halted before premarket trade.

($1 = 0.7740 pounds)

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