Digital payment and tracking solutions fintech company Fiserv announced today the acquisition of 100% of shares in point-of-sale firm First Data in an all-stock transition. The transaction will unite the two companies, creating an industry-leading payments and financial technology provider.
“Through this transformative combination, we expect to redefine the manner in which people and institutions move money and information,” said Jeffery Yabuki, President and Chief Executive Officer of Fiserv. “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.”
Under the agreement, First Data shareholders will receive a fixed exchange ratio of 0.303 Fiserv shares for each share of First Data common stock they own, representing a value of US$22.74, a premium of 29%. This will result in a total equity valuation of First Data of $22bn and leave Fiserv shareholders in control of 57.7% of the company, with First Data shareholders controlling 42.5%.
The merger is expected to generate approximately $900mn in run-rate savings, as well as at least $500mn in revenue synergies. Going forward, the combined company is predicted to have a total revenue of $4bn. Yabuki will become CEO of the new company, while First Data chairman and CEO Frank Bisignano will become the company’s president and COO.
“I have long admired what Fiserv has achieved over the years, and I look forward to working with the talented associates of both companies as we set a higher standard of innovation and service in the industry,” said Bisignano. “Our goal at First Data has always been to provide our clients with the most comprehensive suite of innovative, highly-differentiated solutions and services, and I am excited by the significant value that the combination with Fiserv creates for all stakeholders.”
“We expect the combined company to retain our current investment-grade ratings based on our strong financial profile and excellent free cash flow. Together, this should provide the basis for continued disciplined capital allocation, including debt repayment and share repurchase,” said Yabuki. “We look forward to welcoming First Data’s talented associates to Fiserv as we drive the global digitization of payments and financial technology services.”