Worldpay tanks as JPMorgan quashes hopes of bidding war

Shares in London-listed payments processor Worldpay fell sharply on Wednesday after JPMorgan Chase Bank quashed any hopes investors might have had of a bidding war by saying it does not intend to make an offer for the company.

Earlier, Worldpay confirmed that it has agreed to combine with US-based rival Vantiv Inc for 385p per share in cash and stock, in a deal that values the group at £9.1bn including debt.

Under the terms of the merger, Worldpay shareholders would receive 55p in cash for each of their ordinary shares and 0.0672 new Vantiv shares. Worldpay shareholders would also be entitled to a cash dividend of 5p per share, in place of any anticipated interim dividend payment to be declared and approved by the board by the time of the company's half-year results.

The price represents a premium of around 18.9% to the closing price of Worldpay on 3 July, which was the day before the announcement of a possible offer and premium of 21% to the price on 30 June, the day before broad sector consolidation speculation.

Following completion of the merger, Worldpay shareholders would own around 41% of the share capital of the combined group on a fully diluted basis.

The boards of both companies see "compelling strategic, commercial and financial rationale" for combining the businesses. The said the merger would create "a scale world class payments group in a dynamic market, with deep payments capabilities, product and vertical expertise and strong distribution channels to serve merchants around the world in the global ecommerce market, and in-store and online in the UK and US markets".

"The boards of Worldpay and Vantiv have identified substantial opportunities for cost synergies, which support significant potential shareholder value creation.

"In addition, the boards of Worldpay and Vantiv believe that there would be additional revenue growth opportunities that may be realised as a result of the potential merger."

The combined group will be led by Charles Drucker, who leads Vantiv, as executive chairman and co-chief executive officer, and Worldpay head Philip Jansen as Co-CEO.

London Capital Group analyst Jasper Lawler said: "The concept of the deal seems straightforward and logical - combine the geographic strength of the two companies in payment processing. The strategy geographic expansion explains plans for a joint CEO and joint-headquarters at the new company. From a British-perspective, it’s a shame to see another ground-breaking UK tech company selling out to overseas competition, perhaps before reaching full potential on its own."

Shares in World surged on Tuesday after the company said it had received bid approaches from Vantiv and JPMorgan Chase Bank, an announcement that was made after M&A blog WallStreet Wires said the group had been approached and advisers appointed.

At 1400 BST, the shares were down 9.8% to 368.80p, reversing earlier gains.