RiskTech Forum

Fiserv to buy First Data

Posted: 17 January 2019  |  Source: zephyr

Fiserv is buying US-based First Data for USD 22.00 billion.

As part of the consideration, the buyer is offering 0.30 shares per item of stock held in the target, equating to an offer price of USD 22.74.

This represents a premium of 29.6 per cent to its close of USD 17.54 on 15th January, the last trading day prior to the announcement.

Upon closing, Fiserv’s shareholders will hold 57.5 per cent of the company, and First Data’s will own the remaining 42.5 per cent.

Headquartered in Georgia, the target provides payment processing technology to over 4,000 financial institutions in more than 100 countries.

For the quarter ended 30th September 2018, it posted revenue of USD 2.16 billion, up from USD 2.09 billion in the corresponding period of 2017.

The transaction is part of Fiserv’s strategy to become a global leader within the payments and financial technology industry.

Together, the two businesses will provide a range of payment and financial services, which include account processing, card issuer processing, as well as Clover- a cloud-based point-of-sale platform.

A deal also expands the company’s network of clients in the financial industry.

The purchase is expected to generate free cash flow of over USD 4.00 billion in the third year following closing, and is expected to increase revenue by USD 500.00 million within five years.

In addition to the transaction, Fiserv plans to refinance the target’s debt, which totals USD 17.00 million.

Established in 1984, the buyer claims to be a global leader in financial technology services, including payments, processing services, risk and compliance and channel management.

It generated revenue of USD 3.67 billion for the nine months ended 30th September 2018, up from USD 3.56 billion in the preceding period of 2017.

According to Zephyr, the M&A database published by Bureau van Dijk, there were 145 deals targeting financial transactions processing, reserve and clearinghouse activities companies announced worldwide in 2018.

Verscend Technologies, in the largest of these, bought US-based Cotiviti Holdings for USD 4.90 billion.