In: Finance
Why did Vantiv acquire Worldpay? Analyze the Worldpay deal and its role in the massive payments market
The boards of Vantiv and Worldpay recognize the attractive opportunity which exists for the merger to bring together global scale, integrated technology, and diverse distribution to create a market leader in payment technology to power omni-commerce,
Creates a global leader in eCommerce with significant scale, differentiated products, and worldwide reach
Leverages combined capabilities to expand into complementary, high-growth international geographies, verticals, and client segments
Companies' combined footprint and advanced technology enables delivery of innovation at scale accessible through industry-leading distribution
Value proposition drives high recurring revenues; significant operating leverage offers continued margin expansion opportunities from scalable technology
Accretive to pro forma adjusted net income per share in 2019 and thereafter
Vantiv And Worldpay Announce Recommended Merger To Create A Global Leader In Payments
Creates a global leader in eCommerce with significant scale, differentiated products, and worldwide reach
Leverages combined capabilities to expand into complementary, high-growth international geographies, verticals, and client segments
Companies' combined footprint and advanced technology enables delivery of innovation at scale accessible through industry-leading distribution
Value proposition drives high recurring revenues; significant operating leverage offers continued margin expansion opportunities from scalable technology
Accretive to pro forma adjusted net income per share in 2019 and thereafter
CINCINNATI and LONDON, Aug. 9, 2017 /PRNewswire/ -- The boards of directors of Vantiv, Inc. (NYSE: VNTV) and Worldpay Group plc (LSE: WPG) today announced that they have reached agreement on the terms of a recommended merger of Worldpay with Vantiv and Vantiv UK Limited (a subsidiary of Vantiv).
Under the terms of the merger, which have been further detailed today in an announcement issued under Rule 2.7 of the UK Takeover Code, Worldpay shareholders will be entitled to receive £0.55 cash for each Worldpay share held and 0.0672 of a New Vantiv share. Worldpay shareholders will also be entitled to elect to vary these proportions under a mix and match facility (subject to offsetting elections being made by other Worldpay shareholders). Vantiv and Worldpay shareholders are expected to own approximately 57% and 43%, respectively, of the combined company's shares upon closing.
In addition, Worldpay shareholders will be entitled to receive an interim dividend of 0.8 pence per Worldpay share, and a special dividend of 4.2 pence per Worldpay share, which is conditional on completion of the merger.
The transaction will create a company with an enterprise value of £22.2 billion or US$28.8 billion. It contemplates a premium of approximately 34% to Worldpay's six-month volume weighted average price, and ascribes Worldpay an enterprise value of approximately £9.3 billion or US$12.0 billion.
The combination will result in the creation of a leading global payment provider to power omni-commerce, with comprehensive products and capabilities spanning traditional merchants, integrated payments, and global eCommerce. The merger will combine two of the most capable payments businesses in the world, with strong pro-forma growth and profitability, creating a business model with recurring revenue, diversified customer base, significant global reach, and robust financial performance.
"This is a powerful combination that is strategically compelling for both companies. It joins two highly complementary businesses, and it will allow us to achieve even more together than either organization could accomplish on its own," said Charles Drucker, president and chief executive officer of Vantiv. "Our business will have multiple opportunities to enhance its leading growth profile, driven by our global eCommerce capabilities, the strength of our people and their consistent focus on execution. Our combined company will have unparalleled scale, a comprehensive suite of solutions, and the worldwide reach to make us the payments industry global partner of choice."
"This is a merger of two world class payment companies, which will create a global omni-commerce leader, with substantial opportunities to capitalize on the rapid evolution of payments," said Philip Jansen, chief executive officer of Worldpay. "The growth of eCommerce and the way consumers expect to transact is increasing complexity for businesses around the world. Our unique combination of scale, innovation, technology and global presence will mean that we can offer more payment solutions to businesses, whether large or small, global or local, enabling them to meet consumers' increasing demands and helping them prosper."
Strategic Rationale
Unique combination of scale and global presence
Ability to capitalize on strategic and high-growth verticals
Integrated technology platform built for innovation and to manage complexity
Powerful business model and financial profile
Cost synergies will deliver significant value creation
Capitalize on respective strengths to drive revenue opportunities
The Combined Company
Following completion of the merger, Cincinnati, Ohio, will become the combined company's global and corporate headquarters and London, UK, will become its international headquarters. The combined company will be named "Worldpay".
To ensure a successful and smooth integration, the combined company will be led by Charles Drucker as Executive Chairman and Co-CEO. Reporting to Mr. Drucker will be Philip Jansen as Co-CEO, and Stephanie Ferris as CFO. Additional members of the combined company's executive team reporting to Mr. Drucker and Mr. Jansen will be announced at a later date.
The board of the combined company will consist of five Worldpay directors and eight Vantiv directors. Sir Michael Rake will serve as lead director and Jeffrey Stiefler will continue to serve on the board of the combined company in a non-executive capacity.
The merger is expected to close in early 2018, subject to customary closing conditions as well as regulatory approval and approval by shareholders of both Vantiv and Worldpay.
New Vantiv shares will be authorized for primary listing on the New York Stock Exchange subject to official notice of issuance. In addition, Vantiv will seek a secondary standard listing on the Main Market of the London Stock Exchange in relation to the New Vantiv shares following completion of the merger.
Morgan Stanley & Co. International plc and Credit Suisse are acting as financial advisors and Skadden, Arps, Slate, Meagher & Flom is acting as legal advisor to Vantiv. Goldman Sachs International and Barclays Bank plc (acting through its investment bank) are acting as financial advisors and Allen & Overy is acting as legal advisor to Worldpay
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