Mastercard said Thursday morning (July 21) that it has struck a deal to acquire the vast majority – at 92.4 percent – of VocaLink Holdings Ltd for $920 million, net of cash and estimated liabilities.
The card giant said that the purchase price also allows for an additional payout of $220 million on the condition that certain milestones are satisfied.
In terms of other mechanics of the deal tied to ownership structure, the VocaLink holders will retain their 7.6 percent ownership for at least three years.
Strategically speaking, the deal gives Mastercard control of the firm that in turn processes most payroll and household bill processing in the United Kingdom. VocaLink operates BACS, the automated clearing house that acts as a conduit to direct credit and direct debit payments between bank accounts; faster payments, which is the real-time account to account payments service conducted over mobile, internet and phone rails, and LINK, the country’s ATM network.
The acquisition of VocaLink and 11 billion annual transactions (and £182 million in annual revenues) looks to be a definitive declaration of Mastercard's competitive intent against Visa. The latter has stated it would in turn look to boost its own presence in the region.
The transaction will be dilutive to Mastercard for two years in 2017 and 2018 after closing, initially determined to be early 2017. The dilutive effect will be a nickel per share in each of 2017 and 2018.