Partnerships / Acquisitions

The Deal Is Sealed, Vantiv Will Buy Worldpay For $10.4 Billion

Vantiv’s path to purchase British firm Worldpay has gotten one step closer to completion with a formal offer of purchase for $10 billion (8 billion pounds). The potential deal was first announced in early July — but talks were so protracted that the deadline for a formal offer had to be extended twice.

At central issue between the two firms in the negotiation was corporate governance — and how jobs in the U.K. would be safeguarded.

The deal will see Worldpay take 55 pence in cash, 0.0672 of a new Vantiv share, an interim dividend of 0.8 pence per Worldpay share and a special 4.2 pence dividend. Cumulatively, that values the former RBS unit at about 8 billion pounds — or about $10.4 billion.

The combined company will be renamed “Worldpay” and will be headquartered in Cincinnati with a primary listing in New York and a secondary listing in London.Vantiv shareholders will control about 57 percent of the combined firm while  Worldpay shareholders will own around 43 percent. Vantiv Chief Executive Charles Drucker will head the new firm as executive chairman and co-CEO; Worldpay CEO Philip Jansen will be co-CEO of the joint group.

Internal operations will run from Britain — but as of this announcement, there is no formal guarantee that U.K. jobs and employees will be protected, according to reports in Reuters.

“The growth of eCommerce and the way consumers expect to transact is increasing complexity for businesses around the world,” Worldpay Chief Executive Officer Philip Jansen said. The “combination of scale, innovation, technology and global presence will mean that we can offer more payment solutions to businesses, whether large or small, global or local.”

Collectively, the new combined entity will process approximately $1.5 trillion in payments per year and 40 billion transactions. Those transactions will use 300 payments methods in 146 countries and 126 currencies. Combined net revenue is forecasted to be $3.2 billion.

Consolidation is becoming increasingly normal in the payment industry, as mobile and digital purchasing becomes an increasingly baked-in part of consumer behavior. Blackstone Group LP and CVC Capital Partners Ltd. agreed to buy Paysafe Group Plc for about $3.9 billion last week; meanwhile, Permira and Nordic Capital are among buyout firms looking at a potential acquisition of Nets A/S, the Danish payment-services provider.

Vantiv and Worldpay’s move to consolidate is “sensible” according to Craig Bonthron, a fund manager at Kames Capital.

“[The deal will] consolidate what is a fragmented market and diversify Vantiv’s revenues away from struggling ‘big box’ retailers in the U.S.”

Worldpay released its first-half underlying earnings concurrent to the deal’s announcement.

Those earnings reflect a 13.6 percent increase — driven by strong growth across all its businesses and tightened costs at its U.K. unit. Worldpay’s eCommerce payment business saw net revenue rise 16.9 percent, largely driven by increases in retail, airlines and digital industry.

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