Integration Tasks Emerge Now that the Vantiv-Worldpay Merger Is Official

The merger of payment processors Vantiv Inc. and London-based Worldpay Group plc was completed Jan. 16, and up next for leaders of the combined company is integration of operational platforms, selling products to a wider customer base, and achieving their goal of $200 million in cost savings in three years.

Stock analysts peppered top executives of the new Worldpay Inc., as the Symmes Township, Ohio-based merged company is now known, with questions about integration during a Wednesday morning conference call to review fourth-quarter financial results. The 115,000 merchants served by the pre-merger Worldpay’s Atlanta-based U.S. operation can expect to move to the Vantiv platform. But that’s not going to happen this year, according to chief financial officer Stephanie Ferris.

“The lion’s share of the synergy in the U.S. relates to us migrating the heritage Worldpay U.S. business onto the Vantiv platform,” she said. “We’re working on that diligently; it will take us a bit of time. So we would expect to see that in the first half of 2019 versus the end of the year 2018.”

Another major aspect of the integration is making Vantiv’s U.S.-based services for independent software vendors and value-added resellers available to merchants in legacy Worldpay’s European stronghold. The effort involves a lot of details. Philip Jansen, co-chief executive and the former CEO of the pre-merger Worldpay, spoke of a two-to-four-year timeframe for all products and services to be available everywhere, even though sales are beginning this year.

“What we really want to do is get the technology execution absolutely right and deliver the vision, and that’s why we’re not rushing,” Jansen said.

Charles Drucker, Vantiv’s CEO and now executive chairman and co-CEO of the combined company, added that the integration is being led by Matt Taylor, the former CEO of Mercury Payment Systems, a leader in the ISV/VAR niche and a company Vantiv bought in 2014. As part of his duties, Taylor is developing a sales strategy for Europe.

“We’re starting with the stuff we know how to do,” Drucker said.

The fast-growing ISV/VAR channels make up what the new Worldpay calls its Technology Solutions segment. The segment would have accounted for 37%, or $1.34 billion, of the combined company’s $3.62 billion in net revenues on a pro-forma basis that assumes the merger was in effect for all of 2017. The tech segment grew 21% last year, or 24% on a constant-currency basis.

Worldpay Inc.’s biggest segment is Merchant Solutions, which provides acquiring services directly to large merchants as well as through independent sales organizations and bank-referral partners. That segment generated $1.93 billion in pro-forma revenues last year, up 2% as reported and 4% on a constant-currency basis.

Pro-forma revenues in Worldpay’s third major segment, Issuer Solutions, which includes Vantiv’s processing services for card issuers and the legacy Worldpay’s U.S. ATM business, contracted 7% to $343 million last year. The shrinkage stemmed largely from the loss of a big U.S. bank, Capital One Financial Corp., in the second quarter. Ferris said she expects the segment to resume growing in 2018’s second half.

Adjusted pro-forma earnings before interest, taxes, depreciation, and amortization rose 10% last year (12% on a constant-currency basis) to $1.7 billion. Worldpay predicts 2018’s net revenues will hit $3.8 billion to $3.89 billion.