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After two delays, processor Vantiv Inc. and London-based merchant acquirer Worldpay Group plc finally announced a formal deal Wednesday that has Vantiv acquiring Worldpay in a deal that creates a global processing powerhouse.
The cash and stock deal values Worldpay at $12 billion, a 34% premium to Worldpay’s six-month volume-weighted average share price and $2.1 billion more than Vantiv’s original bid announced in early July. Worldpay requested two delays from United Kingdom competition regulators to announce a formal bid as it haggled with Vantiv, which is based in the Cincinnati suburb of Symmes Township, Ohio, over better terms for Worldpay shareholders, according to reports in the British financial press.
Under the revised agreement, Vantiv shareholders will own 57% of the combined company and Worldpay shareholders will own 43%. The company, to be known as Worldpay, will have its global headquarters in Cincinnati, with international headquarters in London. It will be headed by current Vantiv president and chief executive Charles Drucker, whose new title will be executive chairman and co-CEO. Worldpay’s current CEO, Philip Jansen, will become co-CEO, reporting to Drucker.
The combo will create a behemoth in merchant acquiring and other processing services. The new Worldpay will process $1.5 trillion in global merchant-acquiring volume and 40 billion transactions annually, and serve “hundreds of thousands of merchants,” Jansen said on a conference call Wednesday morning.
In the United States, Vantiv processed $550 billion in merchant volume last year on 21 billion transactions, according to figures from Omaha, Neb.-based consulting firm The Strawhecker Group. Worldpay’s Atlanta-based U.S. operation posted volume of $120 billion on 3 billion transactions, Strawhecker reported. First Data Corp. was the largest U.S. acquirer, with $1.9 trillion in volume coming through its various channels.
“For Vantiv, the merger brings diversification from a geography and merchant-concentration perspective,” Jared Drieling, director of business intelligence at TSG, tells Digital Transactions News by email. “Clearly, the deal provides Vantiv with international capabilities, and the top acquiring position in the United Kingdom. The merger also provides Vantiv some diversification within its existing merchant portfolio.”
Drieling also cites “e-commerce assets and technology synergies among both platforms” as key benefits of the deal. “Worldpay is a heavyweight in international e-commerce, and Vantiv is a leader in U.S. e-commerce,” he says. “This will be a powerful combination.”
Drucker on the conference call specifically pointed to the growth opportunities in e-commerce and integrated payments, two areas where Vantiv is a leader. He referenced projections from McKinsey & Co. that say worldwide e-commerce sales will hit $4 trillion to $4.5 trillion by 2020 versus $2 trillion in 2015. “‘The rapid growth of e-commerce creates an exciting opportunity for our combined company,” he said.
Drucker and Jansen said no decisions have been made yet about technology platforms and other operational issues, although they said the new Worldpay plans to make things as easy as possible for merchants. “Obviously we’re in the early stages,” Drucker said on the conference call. Jansen added that “there will never be one platform across the whole world.”
The deal is expected to close in 2018’s first quarter after getting shareholder and regulatory approvals.
Separately, Vantiv announced its second-quarter financial results Wednesday. Net revenues in the Merchant Services unit increased 16% year-over-year to $449.1 million, mainly due to a 10% increase in transactions and a 5% increase in net revenue per transaction.
