While fintech focus has mostly revolved around startups and their financing for the past few years, the more established giants in the space are making some bold moves today. Global fintech giant Fiserv, has announced a record breaking $22Bn deal to acquire First Data. Reuters reports that this deal going to go down as the biggest ever in the booming industry of digital payments technology.
Although it might seem like an acquisition, the deal is technically a merger. Fiserv’s CEO Jeffery Yabuki will remain as the CEO of the combined company while First Data’s CEO Frank Bisignano will take up the role of President and COO.
We admire First Data for its excellence in merchant acquiring and global issuing services, and the tremendous progress they have made under Frank’s leadership. We expect this combination to catalyze and support an enhanced value proposition for our collective clients and their customers.Jeffery Yabuki
This is said to be an all-stock transaction with a premium of nearly 30 % over First Data’s closing price on Tuesday. According to the deal, Fiserv shareholders will own 57.5 percent of the combined company and First Data shareholders will own 42.5 percent. First Data will receive a ratio of 0.303 of Fiserv shares for each share of First Data common stock, totaling up to $ 20 billion in equity.
Fiserv is a Wisconsin-based fintech company which has been an industry leader for over 35 years. They sell financial systems to banks, credit unions, and other financial institutions. They also provide online payment and processing services. While, First Data is a fintech company based out of Atlanta, Georgia. The company provides services to over 6 million business locations and 4,000 financial institutions in over 100 nations around the globe. The company has also consolidated several start-ups in the industry such as Clover, Perka, Gyft, Blue Pay, and Spree.
Though these companies aren’t the most household names, they played a very crucial role in the development of digital transaction systems and presently serve merchants all over the globe.
The companies aims to save a lot of money with this merger. AJC reports that they expect to create over $ 900 million in “cost synergy savings over five years, driven primarily by the elimination of duplicative corporate structures, streamlined technology infrastructure, increased operational efficiencies, process improvements, and footprint optimization.”
The deal is expected to conclude in the latter half of 2019 and it is expected to increase the earnings per share by 20% within one year.