UK-based payments processing firm Worldpay has formally agreed to a £9.3bn takeover by US rival Vantiv.
The deal creates a global giant with a combined value of £22.2bn, 57% owned by Vantiv shareholders and 43% by those currently holding Worldpay stock.
It will see Vantiv pay £8bn for the company plus £1.3bn to cover debts.
The deal is subject to regulatory and shareholder approval and is expected to complete early next year.
Worldpay, set up in 1989, was part of Royal Bank of Scotland before being spun out to private equity ownership under EU state aid rules after the bank’s £45bn bail-out following the financial crisis.
It was floated on the London stock market in 2015 with an initial valuation of £4.8bn and the new company formed out of the takeover – which will keep the Worldpay name – will retain a secondary listing in the capital, though its main listing will be in New York.
The formal announcement of the takeover disclosed that Vantiv had been eyeing a deal since even before that flotation and that the two companies held abortive talks early last year, before reviving discussions this summer.
An initial agreement was reached in July but the companies spent several weeks ironing out further details.
The new group’s global and corporate headquarters will be in Cincinatti, Ohio, though it will have its international HQ in London and the combined company will be named Worldpay.
It will be led by Vantiv’s Charles Drucker as executive chairman and co-chief executive, with Worldpay’s current boss Philip Jansen as co-chief executive.
The formal announcement confirmed an exclusive Sky News report that Worldpay’s chairman Sir Mike Rake will be lead director of the business’s board.
The combined group will process around $1.5tn (£1.2tn) of payments and 40 billion transactions through more than 300 payment methods in 146 countries and 126 currencies.
Worldpay currently processes more than 40 million payments a day in stores, online and on mobile phones.
Mr Jansen said the merger deal would create a global leader “with substantial opportunities to capitalise on the rapid evolution of payments”.
Mr Drucker said: “This is a powerful combination that is strategically compelling for both companies.”
The two companies will look to cut around $200m (£150m) a year from costs after the merger.
They said these would mainly be through the consolidation of operations in the US while just over a third were expected to come through savings in corporate, e-commerce and tech operations.
Vantiv said it had “high regard for the skills and experience” of Worldpay’s management and 5,000-strong workforce and that their existing employment and pension rights would be observed.
The announcement came as Worldpay reported a 24% fall in pre-tax profits to £129m for the six months to the end of June, despite a strong underlying performance, as it continued to make accounting adjustments following its split from RBS.
Source: Sky News