US payment processing company Vantiv has agreed to take over British peer Worldpay, the pair said Wednesday, to create a global giant worth $27 billion. The deal was billed as a merger, with Worldpay shareholders owning 41 percent of the new group, whose current combined stock market capitalization is the equivalent of about 24 billion euros including debt. Under the cash-and-shares deal, Vantiv is paying around $11 billion including debt for Worldpay.
Under "an agreement in principle" to combine, Vantiv chief executive Charles Drucker and his counterpart at Worldpay, Philip Jansen, will serve as co-chief executives, the companies said. "The potential merger creates a scale world class payments group in a dynamic market, with deep payments capabilities, product and vertical expertise and strong distribution channels to serve merchants around the world in the global ecommerce market, and in-store and online in the UK and US markets," the companies said.
The news came one day after Worldpay's share price rocketed on news it had received takeover approaches from both Vantiv and banking giant JPMorgan Chase. The latter indicated it would not pursue a transaction. JPMorgan had been "at a very early stage in considering whether or not to make an offer" for Worldpay, a spokesman said. "Following preliminary considerations, JP Morgan hereby announces that it does not intend to make an offer for Worldpay."
Near 1510 GMT, shares of Worldpay were down 8.4 percent to 373.70 pence, while Vantiv lost 3.1 percent to $60.58. Companies like Vantiv and Worldpay have grown as rising e-commerce sales have prompted more merchants to adopt technology that employs PIN features and must be resistant to hackers. A note from brokerage firm Stifel said PayPal would have been another potential acquirer of Worldpay.
The companies said combining has a "compelling strategic, commercial and financial rationale," including the collaboration on technology and the potential for "substantial opportunities for cost synergies." Worldpay has 400,000 customers and was owned by the Royal Bank of Scotland until the state-backed lender sold off its remaining stake to private equity firms Advent International and Bain Capital in 2013.