Fiserv, the financial services firm, announced on Wednesday (Jan. 16) that it would buy First Data, the payments processor, in a deal valued at $22 billion, marking a landmark deal in the FinTech sector.
The all-stock deal is roughly a 30 percent premium to First Data’s closing price Tuesday of $17.54.
The deal is slated to close in the second half of 2019. As the companies said in the announcement Wednesday, upon consummation, Fiserv shareholders will own 57.5 percent of the combined entity, while First Data holders will have 42.5 percent.
Fiserv CEO Jeffery Yabuki will be CEO of the merged firms, and First Data CEO Frank Bisignano will be president and COO.
The firms said in a statement that end users would benefit from a “highly complementary combination” that offers a range of payments and financial services, spanning account processing and digital banking, integrated payments and the Clover POS system, among other products and services.
Fiserv and First Data said they will link their respective merchant and cash management capabilities, further developing new offerings and providing First Data's Clover cloud-based platforms for small and medium-sized businesses. For example, First Data's digital merchant account enrollment capabilities can be integrated into Fiserv's digital banking solutions that serve thousands of financial institutions. The companies also said the payments platform will span issuance to acceptance.
Incremental investments will focus on technology – as much as $500 million over five years, said Fiserv and First Data, with revenue synergies of $500 million over a five-year period, too. Revenue growth will come from a focus on bank merchant services and Clover, credit processing, additional biller services and network initiatives.
Through the same five-year period, $900 million in cost savings should be realized, with streamlining of technology infrastructure and the reduction of duplicative corporate structures.