The UK’s largest electronic payment processing group, Worldpay has found itself at the middle of a takeover tug of war involving two of its American competitors. Shares in Worldpay have soared following separate approaches from US payment hander Vantiv and JPMorgan Chase bank, valuing the group at more than $10 billion. All this comes less than two years from when it first floated on the stockmarket
Launched in 1989 firstly as Streamline, Worldpay provides technology to retailers and other businesses to accept card payments and online or mobile transactions. Worldpay is now chaired by veteran businessman Sir Michael Rake, who also chairs the BT Group and is also a director of S&P Global.
2016 was a great year for the business which saw revenue rise 15% to £4.5 billion and pre-tax profits leap by £264 million from £19 million in 2015. It now has more than 5000 employees, the majority of which are based in London but there are also major offices in cities such as Manchester, Gateshead and Cambridge. It is widely renowned as the market leader in payments in the UK and it handles more than 40% of all transactions, its systems being particularly popular with small and medium sized businesses such as pubs, shops and restaurants.
The takeover attempts show just how payment processors have become attractive takeover targets for banks, technologies and credit card forms at a time of rapid growth in the sector. This week has also seen Nets, the leading Danish payment processor announce that it has also been approached by a number of potential buyers.
“This is one of the most intriguing sub-sectors in the financials space,” said Angelo Meda, head of equities at Banor Capital.
“There are a lot of companies still, and we are probably going to have only one or two big leaders in the payments space.”
Dave Birch, an analyst at Consult Hyperion, said such companies were under pressure to form bigger global businesses.
“Consolidation is widely seen as the only way forward for these businesses. There are global merchants out there who want global suppliers: they don’t want one in the US and another in the UK.”
There is talk that the news that Worldpay was being looked at by potential bidders could trigger interest from other potential buyers. An analyst at Mediobanca Securities said: “We believe Worldpay is a unique asset and the current interest from two US peers could also trigger the intention of parties like Google, Amazon, Apple.”. Such interest could see Worldpay’s price skyrocket.