Cincinnati, Ohio-based Vantiv Inc. (NYSE: VNTV) and London-based Worldpay Group plc (LSE: WPG) have agreed to merge in a deal that 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.
Under the deal, 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 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.
The combined entity will generate US$1.5 trillion in payment volume and 40 billion transactions processed through more than 300 payment methods in 146 countries and 126 currencies. Based on the financial statements of Vantiv and Worldpay for the year ended 31 December 2016, the combined company would have pro forma net revenue of over US$3.2 billion and free cash flow generation of over US$1 billion.
Vantiv is the largest merchant and PIN debit acquirer in the US, based on number of transactions, processing 25 billion transactions and nearly $1 trillion in sales volume annually. A leading integrated payment processor, Vantiv offers a comprehensive suite of traditional and innovative payment processing and technology solutions to merchants and financial institutions of all sizes, enabling them to address their payment processing needs through a single provider.
Founded in 1971, Vantiv is using its scale, range of products and services, and technology to expand further into high-growth channels and verticals, including integrated payments, eCommerce, B2B payments, and merchant banking. Headquartered in Cincinnati, Ohio, Vantiv employs 3,700 people.
Worldpay is a leading payments company with global reach. Worldpay provides an extensive range of technology-led payment products and services to around 400,000 customers, enabling their businesses to grow and prosper. Worldpay manages the increasing complexity of the payments landscape for its customers, allowing them to accept the widest range of payment types around the world. Using its network and technology, Worldpay is able to process payments across 146 countries and 126 currencies. Worldpay helps its customers to accept more than 300 different payment types.
Worldpay UK has approximately 39% market share in the UK and helps businesses of all sizes sell more to their customers by accepting card payments in-store, online, via mail or telephone, and on the move.
The UK merger announcement, which contains further information and the terms and conditions of the merger, can be found at the companies’ respective investor relations websites.
“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.”
On a pro forma basis, assuming the merger had completed on 31 December 2016, the combined company would have US$1.5 billion of adjusted EBITDA, an EBITDA margin of 48%. and free cash flow generation of over US$1.0 billion
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”.
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.