Worldpay rockets as it confirms approaches from Vantiv and JPMorgan

Shares in Worldpay rocketed on Tuesday after the payments processor confirmed that it has received preliminary approaches from US-based payment processing and technology provider Vantiv Inc and JPMorgan Chase Bank over a potential acquisition.

"There can be no certainty either that an offer will be made nor as to the terms of any offer, if made," it said, adding that a further announcement will be made if appropriate.

The statement came amid speculation the company may be a bid target, after M&A blog WallStreet Wires said people familiar with the matter were suggesting it had been approached and advisers appointed.

"Given that the big guns Mastercard and Visa are said to be sniffing around Nets A/S, we can assume the same degree of status for those targeting Worldpay. One would not rule out the need for the likes of Apple Pay and Paypal - previously suspects for Nets, entering the fray here," it said.

Danish card payment services company Nets confirmed over the weekend that it had been approached by potential buyers.

Olivetree Financial highlighted the fact that these approaches come hot on the heels of the preliminary approach to Nets, but argued that Worldpay is a more attractive asset likely to invite more competitive interest.

"The synergy potential in payment system tie-ups is significant. With Vantiv’s offer likely to comprise a majority of stock and JPM likely to offer all cash, this offers a hugely attractive situation; a similar sized entity where the impact of the synergies will be significant for the combined entity, bidding against the power of the JPM balance sheet."

Olivetree said a deal would make sense for an number of reasons for both Vantiv and JPMorgan Chase. It noted that Worldpay has been weak in the US, with its market share in the region of 1-3% for a number of years. The leaders there, with 14-17% market share, are JPMorgan Chase and Bank of America, while Vantiv is in the top 5. "Thus moving Worldpay’s US volumes would be value accretive," it said.

In addition, it pointed out that both companies have a presence in the US online market, but have little scale in the international market, with Worldpay’s geographical exposure opposite to them. Finally, it said the platforms developed by between 2012 and 2016 are extremely high quality in contrast to the possibly dated platforms of both Vantiv and JPM.

At 1400 BST, the shares were up 28% to 408.50p.