Mastercard Inc (NYSE:MA), the second-largest payments network in the United States, announced on Thursday that the company would buy 92.4% of VocaLink Holdings Ltd, a Britain’s payment processor, in an all-cash deal of $920 million.
VocaLink handles over 90% of payroll, 70% of household bill, and connections between all of the 67,000 ATMs in the United Kindom. The deal will help Mastercard to boost its presence in Britain following the Visa’s (NYSE:V) deal of buying Visa Europe for more than $20 billion. The development of the faster system for bank-owned automated clearing house payments network by VocaLink, which generated over 90% of its revenue from non-card electronic payments, will also help Mastercard to be more competitive in the business-to-business and person-to-person payments markets.
According to the statement, the current shareholders of VocaLink, would keep 7.6% stake and if the targets are reached, they will get 169 million more. One of the company’s largest shareholders, Barclays Plc, sold its most of its ownership worth 104 million pounds to Mastercard. After the deal, Paul Stoddart will be the Chief Executive Office of VocaLink, the previous CEO of the company, David Yates, will be the chairman and part of the Mastercard’s management committee. Mastercard said the transaction will have negative effect on the profit, the company is expected to decrease earnings by 5% in the two years after the deal is closed.
“We’re excited about the opportunity to play a bigger role in payments in the UK, a very strategic market for us. 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 UK and around the world.” said Ajay Banga, the CEO of MasterCard.