U.S. credit-card processing company Vantiv and Worldpay Group have reached an agreement on a potential merger worth $9.94 billion, the companies announced on Wednesday.

Worldpay is the largest payment processing company in the United Kingdom and was once owned by the Royal Bank of Scotland Group.

Customers have been switching from cash transactions to smartphone, or mobile device, transactions, making payment processing companies targets for acquisition by credit card companies and banks. The Vantiv-Worldpay merger is expected to trigger further deals, Reuters reports.

Under the terms of the cash-and-stock transaction, shareholders of Worldpay would own about 41% of the share capital of the newly-combined group, the companies said. The offer represents an 18.9% premium to the closing share price of Worldpay in London on July 3.

In a statement, the companies said the merger would create a world-class payments group with vertical expertise and strong distribution channels. Both company boards said they have identified “substantial opportunities for cost synergies” and there would be “additional revenue growth.”

The CEO of Vantiv, Charles Drucker, will head the combined group as executive chairman and co-CEO, a role he will share with Worldpay’s Philip Jansen. The CFO of Vantiv, Stephanie Ferris, will remain CFO of the combined group. The new board would comprise four directors from Worldpay and seven from Vantiv.

JPMorgan had also been considering an offer for Worldpay in response to an invitation from the company. In a statement, it said it would not make an offer. Analysts from Cowen said, given the current price and strategic rationale for Vantiv, it was unlikely that other suitors would emerge.

Under the deal, Worldpay shares would be delisted from the London Stock Exchange. Vantiv’s common stock, held by the combined group, will remain on the New York Stock Exchange.

The companies said discussions are ongoing and subject to due diligence.

, , , ,

Leave a Reply

Your email address will not be published. Required fields are marked *