Deal of the day
In the same week that the UK’s ARM Holdings agreed to be acquired by Japan’s SoftBank in a £23.4bn deal, another significant British firm – the payment systems group VocaLink – has drawn the attention of an overseas buyer.
VocaLink, which operates the UK’s network of Link cash machines as well as the direct debit processor Bacs and the real-time payments system Faster Payments, is being acquired by the US giant MasterCard in an effort by the latter to up its UK presence and play a “more strategic role in the UK payments ecosystem,” it said.
The two sides reached agreement after talks that are thought to have lasted eight months on the deal that sees MasterCard pay £700m (US$920m) to acquire 92.4% of VocaLink, with the latter’s existing shareholders – the majority of which will retain the outstanding 7.6% ownership for at least three years – having the potential for an earn-out of up to an additional £169m (US$220m), if performance targets are met.
Owned by a group of 18 banks and building societies including Lloyds Banking Group, HSBC, Barclays and Santander, VocaLink reported revenues of £182m in 2015 and processed more than 11 billion transactions. In the UK, the group processes over 90% of salaries, more than 70% of household bills and almost all state benefits.
Commenting on the deal Ajay Banga, MasterCard’s president and CEO says: “We’re excited about the opportunity to play a bigger role in payments in the UK, a very strategic market for us”.
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