Jobs at Risk in US as Worldpay Agrees £9.3 Billion Tie-up with Vantiv

Worldpay’s chief executive has admitted that its £9.3bn acquisition by US rival Vantiv will “inevitably” lead to job losses among its combined 8,700 workforce, with the axe most likely to fall on those based in the US. Vantiv’s takeover offer has finally been accepted by Worldpay’s board after the British company was granted a second extension to talks earlier this week. Woldpay has agreed a £9.3 billion merger deal with US rival Vantiv in a tie-up that will create a global payments processing giant with a combined value of £22.2 billion. The deal, which comes after a second extension to the talk deadlines on Tuesday, will see Vantiv pay 397p a share for Worldpay, or £8 billion, plus £1.3 billion to cover debts.

The combined group will be called Worldpay and will be led by Vantiv’s Charles Drucker as executive chairman and co-chief executive, with Worldpay’s current boss Philip Jansen as co-chief executive. Mr Drucker said: “This is a powerful combination that is strategically compelling for both companies.

Jobs at Risk in US as Worldpay Agrees £9.3 Billion Tie-up with Vantiv

“It joins two highly complementary businesses, and will allow us to achieve even more together than either organisation could accomplish on its own.”

Under the terms of the deal, Worldpay shareholders will own 43 per cent of the company, with 57 per cent held by investors of Cincinnati-based Vantiv. The combined group will have a secondary listing on the London stock market, but will have its primary listing in New York. Cincinnati, Ohio, will become the group’s global and corporate headquarters, while its international HQ will be in London.

Mr Jansen said: “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.”

The two firms will look to cut around 200 million US dollars (£154 million) from costs after merging.

Vantiv confirmed it has “high regard for the skills and experience” of Worldpay’s management and 5,000-strong workforce and their existing employment and pension rights will be “observed”.

The combined group will process around €1.5 trillion (£1.2 trillion) of payments and 40 billion transactions through more than 300 payment methods in 146 countries and 126 currencies.

Worldpay processes millions of payments a day in stores, online and on mobile phones.

It was owned by Royal Bank of Scotland until the state-backed lender sold off its remaining stake to private equity firms Advent International and Bain Capital in 2013.

The company later sealed the biggest flotation of 2015 when it listed on the London Stock Exchange with a valuation of £4.8 billion.

Vantiv handled 25 billion transactions worth €920 billion (£711 billion) last year.

It is largely focused on the US, helping merchants, banks and credit unions accept card payments, as well as gift cards and online payments.

The deal will see the Ohio-based card processor pay 397p per share for the business, a 23pc premium on its closing price when the deal first emerged a month ago.

Vantiv is targeting cost synergies of $200m (£153.7m), with Worldpay chief executive Philip Jansen, who will co-head the enlarged company, confirming that the deal would lead to job cuts.

While there is no guarantee that jobs in the UK will be protected, Mr Jansen said most of the losses were likely to come from the US, where the companies have targeted 63pc of all cost savings flowing from the deal.

The new payment giant, which will keep the Worldpay name and have a market capitalisation of around £22bn, will have its global headquarters in Cincinnati and its international headquarters in London.

Jobs at Risk in US as Worldpay Agrees £9.3 Billion Tie-up

Mr Jansen said there had been “no disagreements” over the deal and put the delays down to “working through the mechanics” of the mega-merger, a sentiment echoed by Vantiv’s chief Charles Drucker. However the original terms had rattled some UK shareholders after Worldpay warned it would be too expensive to have a dual listing in London and New York. It has now agreed to have a secondary listing for its shares on the London Stock Exchange.

The company, which will be 43pc owned by Worldpay shareholders, will be led by Mr Drucker as executive chairman and co-chief executive alongside Mr Jansen.

The move comes just two years after Worldpay listed in London and seven years after it was sold by the Royal Bank of Scotland to Bain Capital and Advent at the behest of a European Union diktat in the wake of its Government bail-out in 2008.

Mr Jansen pointed to the growing interest in payment firms as more people swap cash for electronic payments. “The growth of e-commerce and the way consumers expect to transact is increasing complexity for businesses around the world,” he said.

The announcement came as Worldpay released its half-year results showing an 18pc growth in first-half revenues and a 9pc jump in underlying pre-tax profits.

Total revenues climbed to £2.5bn in the six months to the end of June, from £2.1bn in the same period of 2016. On a statutory level, pre-tax profits fell from £167m to £129m.

The company is responsible for around 400 electronic payments every second, with more than 16,000 hairdressers, 24,000 restaurants and 9,000 pubs in the UK relying on it.

Since listing in 2015 its stock market value has more than doubled to more than £8bn.

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