MasterCard acquires VocaLink

Last Thursday, MasterCard Incorporated announced that it has entered into a definitive agreement to acquire 92.4 percent of VocaLink Holdings Ltd. for approximately $920 million. VocaLink operates some payments technology platforms on behalf of U.K. payment schemes, including the Zapp mobile payments app.

The transaction is subject to regulatory approval and other customary closing conditions. Under the agreement, a majority of VocaLink shareholders will retain 7.6 percent ownership for at least three years.

“We’re excited about the opportunity to play a bigger role in payments in the U.K., a very strategic market for us,” Ajay Banga, president and CEO of MasterCard, said in a statement. “VocaLink is a unique company with outstanding technology, assets and people. We look forward to investing in and maximizing the technology, and embedding it in our products and solutions, both in the U.K. and around the world.”

Vocalink is primarily known for operating the following services:

  • BACS: the Automated Clearing House that manages direct credit and direct debit payments between bank accounts;
  • Faster Payments: the real-time account-to-account service that enables payments via mobile, internet and telephone; and
  • LINK: the U.K. ATM network.

“Today’s announcement is positive news for our partners, customers and employees,” said VocaLink CEO David Yates. “We will continue to focus on ensuring that the U.K. systems perform seamlessly, maintaining the highest levels of quality. At the same time, we’ll invest in further innovation to power competitive payments solutions for consumers and businesses around the globe.”

Upon closing of the transaction, Yates will join the MasterCard management committee.

MasterCard expects the transaction to be dilutive for up to 24 months after the deal closes. If the deal closes in early 2017, the company currently estimates the transaction would be 5 cents dilutive to each of 2017 and 2018 earnings per share. The dilution would be due to continued levels of new product investment, transaction and integration costs, as well as amortization of intangibles, according to the announcement.

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