Mastercard has opened up a turf war with rival scheme Visa over the acquisition of cross-border payment firm Earthport, posting a £233 million cash offer for the UK firm.
„Under the agreement, which will be subject to the conditions and further terms set out in Appendix I of the announcement at investor.mastercard.com, Earthport shareholders will be entitled to receive 33 pence in cash for each Earthport share. The acquisition values the entire issued and to be issued ordinary share capital of Earthport at approximately £233 million (approximately US$305 million) on a fully diluted basis.”, according to the press release.
Visa made a surprise £198 million bid for Earthport over the festive season, an offer which was recommended by the company’s Board and put to shareholders, according to finextra.com.
Mastercard’s rival bid comes at a ten percent premium to Visa’s valuation, moving Earthport to withdraw its recommendation of the Visa Offer. With a better offer on the table, the company is now proposing to adjourn the Earthport Shareholder meetings convened for 21 February 2019 to consider the Visa Offer.
Commenting, Sunil Sabharwal, interim chairman of Earthport, says: „The Board of Earthport is pleased to recommend Bidco’s cash offer for Earthport which is at a 10 per cent. premium to the Visa proposal. This offer provides our shareholders with even greater value in cash for their shares.”
Earthport provides cross-border payment services to banks and businesses but had a difficult 2018 that included the loss of a major payment customer, reduced transaction volumes and a management shakeup.
Revenues in the year to June were £31.9 million with operating losses of £8.4 million.
Visa has yet to respond, but Earthport shares jumped by 34% to 34.5 pence, factoring in the potential for a higher bid.
Earthport’s shares, listed on the London Stock Exchange’s secondary market, fell more than 28 percent in 2018 amid growing losses and expenses, forcing the firm to say in November that “fundamental” changes were required in its strategy.
More about Earthport
Among the FinTech50, Earthport is a regulated financial institution under the auspices of the UK’s Financial Conduct Authority (FCA). Earthport provides clients with access to a global payment network, maintaining local banking partnerships, through which client business is settled directly via local clearing to banked beneficiaries in over 65 countries.
Under British Law, Earthport has status as an Authorised Payments Institution (API), which means the company is regulated and governed in much the same way as a bank.
Earthport has over 200 employees and is headquartered in London with regional offices in New York, Miami, Dubai and Singapore.
Banking 4.0 – „how was the experience for you”
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