Fiserv’s First Data Deal Remains on Track Despite Justice Request

Core processor Fiserv Inc. continues to expect its $22 billion deal to acquire First Data Corp. will close in 2019’s second half despite a U.S. Department of Justice inquiry about the merger, Brookfield, Wis.-based Fiserv reported Tuesday.

The Justice Department asked for more information and documents on April 4, though Fiserv in a press release did not disclose what it provided to regulators.  The deal is being vetted under the Hart-Scott-Rodino Antitrust Improvements Act of 1976.

 Fiserv continues to believe the plan will be approved, neither company will have to make divestitures, and the deal will close as originally announced in January. Fiserv does face an investor lawsuit over the deal.

“From our perspective we believe the First Data combination provides differentiated solutions and necessary scale to evolve for the long term,” Jeffery Yabuki, Fiserv’s president and chief executive, told analysts during a conference call about the company’s first-quarter results. He added that the company is cooperating with the Justice Department. 

Though Atlanta-based First Data and Fiserv continue to operate as separate companies until the closing, some integration work is underway. The two firms have teams of employees reviewing 40 discrete business areas, Yabuki said. “It’s much broader than we thought it would be at this stage.” Not all of these will yield financial results on day one of the new company, Yabuki added. “We will have plenty to pursue as we get to closing.”

Analysts asked Yabuki about First Data’s results, which were released Tuesday as well. First Data said its first-quarter merchant-processing revenues from North American clients increased 5% from last year to $1.07 billion. First Data is a solid, growing business, Yabuki said. “We feel good about those results.”

When asked for his comments about the $43 billion deal between core-processing rival Fidelity National Information Services Inc. (FIS) and Worldpay Inc., Yabuki said the markets are changing, and changing fast. “We believe the combination with First Data gives us a far broader solutions set than any other combination could have created,” he said, noting that First Data’s reach into payments is pervasive. “There hasn’t been a payments conversation in the last 50 years that hadn’t included First Data.” 

In other payments news, Yabuki said Fiserv’s person-to-person transactions, which include its Popmoney service and Zelle from Early Warning Services LLC, increased 100% from the prior year. “Zelle transactions alone nearly quadrupled from last year,” Yabuki said. 

Fiserv reported $1.29 billion in first-quarter revenue, up 4% from $1.24 billion a year earlier. Its net income of $225 million was down 47% from $423 million. Fiserv attributed the decrease in part to the sale of a 55% interest in the company’s Lending Solutions business.