It was over almost before it began. On Tuesday 4 July, Worldpay's (WPG) share price rose by a quarter on the day it confirmed separate "preliminary approaches" from credit card processor Vantiv (US:VNTV) and banking group JPMorgan (US:JPM). On Wednesday, Vantiv agreed 'in principle' to buy the FTSE 100 payments processor for 55p a share and 0.0672 of new Vantiv shares. JPMorgan then told the market it did not intend to make an offer.
The boards of Vantiv and Worldpay said their union would create "a scale world-class payments group in a dynamic market, with deep payments capabilities, product and vertical expertise and strong distribution channels". There should also be "substantial" cost synergies on offer.
Worldpay is the number one payments business in Europe, and any company wanting to become the world's leading payments processor would do well to have it on board, said Cenkos analyst Martin O'Sullivan before the deal announcement was made. The US is the world's largest market for payments processing and Vantiv, then JPMorgan, are the two top players in terms of volume of transactions processed.
Worldpay is a major player, processing 15bn transactions in 2016, against Vantiv's 25bn. The sector is being driven by the surge towards online commerce. Worldpay's 'Global eCom' business was a key driver of the company's overall top-line growth for 2016 - serving multinationals across 146 countries and 126 currencies, and contributing significantly to Worldpay's total transaction value of £451bn.
Worldpay has not been without its troubles: a technical outage delayed millions of payments last summer, and its US growth has been modest, which goes some way to support the rationale for a tie-up. The business is also in the process of separating its core systems from Royal Bank of Scotland (RBS), which sold it in 2010.
The £9.1bn acquisition of Worldpay would mean yet another UK technology business being snapped up by an overseas firm. Clearly, Worldpay's bidders identify serious value in their target. For O'Sullivan, this is not least because of the attractive dollar/sterling exchange rate since the Brexit vote.
