Vantiv Acquires Worldpay for $10 Billion

Vantiv the U.S. based payment card processing company moved nearer to the creation of a global payments behemoth of $29 billion Wednesday with its official offer to acquire Worldpay, based in Britain, for £8 billion or $10 billion.

Although the deal was announced first back in early July, it has been several weeks of negotiations for it to finally conclude, with the former offer deadline extended on two occasions as both companies had problems with governance and ways of safeguarding jobs in Britain.

On Wednesday, Worldpay announced that Vantiv offered cash of 55 pence, 0.067 of a new share of Vantiv, one interim dividend worth 0.8 pence per share of Worldpay, and a special dividend of 4.2 pence, which values the former unit of RBS at £8 billion or a per share value of 397 pence.

The new combined entity will be called Worldpay and is to have its headquarters in Cincinnati and its primary listing in New York with a secondary one in London.

Shareholders of Worldpay will own 43% of the new entity, while investors holding Vantiv will own 57% of the combined companies whose market value is over £22 billion or $29 billion.

The international operations of the company will operate from Britain, but no formal guarantees are in place that employee positions in the UK will be protected.

This new combined company will become one of the leaders in payment processing, with total processing of nearly $1.5 trillion worth of payments and over 40 billion transactions across 300 payment methods in 126 currencies and 146 countries, with net revenue combined of more than $3.2 billion.

Current Vantiv CEO Charles Drucker will lead the new group as the Co-CEO and executive chairman, while Philip Jansen the current boss at Worldpay will act as the Co-CEO but report to Drucker.

CFO at Vantiv Stephanie Ferries will keep that role in the new group reporting directly to Drucker.

Five directors from Worldpay will sit on the new entity’s board of directors including Sir Mike Rake, the non-chairman at Worldpay, becoming the lead director of the board for the new group.

The deal gives an enterprise value for Worldpay of approximately £9.3 billion and will have annual pre-tax recurring cost synergies that total $200 million.

The synergies, said financial officials from both companies, should be fully realized by the third year end following the closing of the merger.

However, the new group is expected to have one-off costs for integration and restructuring of close to $330 million.