Fiserv said Wednesday it will acquire First Data in a $22 billion fintech mega-deal that will combine an array of financial and payments services under one roof.
The all-stock acquisition is the largest ever in “the booming market for digital payments,” according to Reuters, with Fiserv adding First Data’s payments capabilities to its digital banking solutions that serve thousands of financial institutions.
“The merger underscores the general trend of consolidating different parts of the financial services ecosystem, providing a one-stop-shop to clients, and building more integrated services overall,” TechCrunch said.
Under the terms of the deal, Fiserv will pay $22.74 for each First Data share, a premium of nearly 30% over Tuesday’s closing price. In trading Wednesday, First Data shares climbed 20% to $21.07.
“Through this transformative combination, we expect to redefine the manner in which people and institutions move money and information,” Fiserv CEO Jeffery Yabuki said in a joint news release.
The companies noted their combined portfolio will include account processing and digital banking solutions; card issuer processing and network services; e-commerce; integrated payments; and First Data’s Clover cloud-based point-of-sale solution.
“Fiserv will be uniquely positioned to help financial institution clients more effectively meet the needs of business and commercial clients with offerings such as First Data’s Clover platform,” the companies said. “First Data corporate clients will benefit through market-leading biller solutions from Fiserv.”
Fiserv and First Data said they will also be investing $500 million over the next five years on new tech in areas such as merchant solutions, digital services, risk management, and payments
First Data serves approximately six million business locations and 4,000 financial institutions in more than 100 countries, processing more than 3,000 transactions per second and $2.4 trillion per year. According to Reuters, it has a strong market position for payments, especially in the U.S., but has been weighed down by heavy debts from a $29 billion leveraged buyout.
Fiserv will refinance the approximately $17 billion of debt that First Data is expected to have at the time of the closing of the deal.
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