Worldpay soars amid takeover interest from Vantiv, JPMorgan

Bloomberg

Worldpay Group Plc, UK payment-processing firm that listed in London 2 years ago, said it has received preliminary takeover approaches from Vantiv Inc. and JPMorgan Chase & Co.
Worldpay shares surged as much as 26 percent and were up 21.6 percent at 12:10 p.m. in London to 389.4 pence, giving the former payment-processing division of Royal Bank of Scotland Group Plc a market value of 7.8 billion pounds ($10.1 billion). Other payments companies also gained, with Germany’s Wirecard AG and France’s Worldline SA climbing as much as 5.3 percent and 4.4 percent respectively.
“A combination with either Vantiv or JPMorgan would make sense in terms of the overlap of their businesses,” said Martin O’Sullivan, an analyst at Cenkos Securities in London with a hold rating on Worldpay shares. “Vantiv and JPMorgan are the No. 1 and No. 2 payments acquirers worldwide in terms of the volumes they process. That’s mainly because they’re super strong in the US, while Worldpay is No. 1 in the UK and Europe.”
There’s no certainty that an offer will be made, and to comply with UK takeover rules, Vantiv and JPMorgan must say by Aug. 1 whether they intend to bid, Worldpay said in a statement. It is being advised on the deal by Goldman Sachs Group Inc., a spokesman for the London-based company said.
A spokeswoman for JPMorgan in London declined to comment. Payment services upstarts are challenging traditional banking’s grip on the movement of money as customers increasingly make payments on mobile devices. Technology giants including Apple Inc. are also jumping in to disrupt an industry that has long been the domain of banks. The announcement comes a day after Danish payment services provider Nets A/S said it’s reviewing its options after receiving interest from potential buyers.
While combining Worldpay with either JPMorgan or Vantiv would bring efficiency from sharing operations, it could also help the companies to “mount a more robust defense to new kids on the block,” O’Sullivan added.
WallStreet Wires said earlier on Tuesday that Worldpay, whose shares have climbed more than 60 percent since its listing in 2015, had received an approach and hired advisers. The total value of transactions handled by the company grew 14 percent to 14.9 billion pounds in 2016, while revenue increased 15 percent to 4.5 billion pounds and pretax profit rose to 264.1 million pounds.
RBS sold a majority stake in Worldpay to Bain Capital and Advent International in 2010 to comply with European state aid rules after receiving a 45.5bn-pound bailout from the UK government during financial crisis.