Worldpay’s Possible Sale Raises the Secor

Payment processing companies trade up after Vantiv, Worldpay in potential merger

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Shares of payment processing stocks are outperforming the broader market after Vantiv (VNTV), a U.S.-based payment processing and technology provider, announced its intentions to acquire Worldpay, the U.K.’s largest payment processing firm, in a deal valued at GBP 7.7B, or $9.94B.

POTENTIAL MERGER TERMS

Under the terms of the potential merger, the ordinary shareholders of Worldpay would receive GBP 0.55 in cash and GBP 0.0672 new Vantiv shares.

Worldpay shareholders would also be entitled to a cash dividend of 5p per Worldpay share, in place of any anticipated interim dividend payment to be declared and approved by the board of Worldpay by the time of Worldpay’s half year results 2017.

The total value to Worldpay shareholders would be GBP3.85 per Worldpay share comprising the 5p dividend payment and GBP3.80 per Worldpay share, based on the closing share price of Vantiv on July 3 of $62.51.

Following completion of the potential merger, Worldpay investors would own approximately 41% of the share capital of the combined group on a fully diluted basis. Discussions between the parties remain ongoing regarding the other terms and conditions of the potential merger, the companies cautioned, and said they will proceed with a mutual due diligence process.

WHAT’S NOTABLE

JPMorgan (JPM), which had been rumored to be eyeing Worldpay, is not planning to make a competing offer, Bloomberg reported.

PRICE ACTION

Vantiv is down 2.5% to $60.92 in Thursday’s trading, while shares of other firms in the payment processing space are higher, including Square (SQ), up 5% , First Data (FDC), up 2.1%, Fiserv (FISV), up 0.7%, and Fortinet (FTNT), up almost 4%.

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The article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility.

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