Terms of the Deal
In the all-stock deal, First Data shareholders will receive a fixed exchange ratio of 0.303 Fiserv shares for each share of First Data common stock they own. The .303 number represents a premium of the 5-days volume weighted average of First Data shares as of yesterday’s closing. The resulting transaction equates to a deal worth roughly $22 billion in equity value. If the transaction is approved, Fiserv shareholders will own 57.5% of the resulting company, while First Data shareholders will retain the remaining 42.5%.
Fiserv: A History of Fintech Services
Founded in 1984, Fiserv has long been a provider of financial services technologies to U.S. banks. In 2015, both American Banker and BAI ranked Fiserv third in revenue among technology providers to U.S. banks. According to a company statement, Fiserv expects to report GAAP revenue of $5.82 billion for 2018, a figure which represents a 2% increase from the prior year.
First Data: A History of Transaction Technology
First Data – which went public in 2015 – provides electronic transaction technology to merchants, financial institutions, and customers alike. The company operates in over 100 countries, and its technology is found at more than 6.2 million merchant locations. The company’s technology is currently used by over 4,000 financial institutions, and boasts more than 3,000 transactions per second, which add up to more than $2.4 trillion in funds processed per year.
A Merger of Mutual Admiration
In a statement regarding the merger, Fiserv CEO Jeffery Yubuki remarked, “We admire First Data for its excellence in merchant acquiring and global issuing services, and the tremendous progress they have made under Frank’s leadership. We expect this combination to catalyze and support an enhanced value proposition for our collective clients and their customers.” The statement of mutual admiration was echoed by First Data CEO Frank Bisgnano in stating, “I have long admired what Fiserv has achieved over the years, and I look forward to working with the talented associates of both companies as we set a higher standard of innovation and service in the industry,”
If the deal is approved as expected, Fiserv CEO Jeffery Yabuki will become the CEO and chairman of the combined company, while First Data CEO Frank Bisignano will become the president and COO, as well as joining the board of directors.
The deal is expected to close sometime in the second half of 2019.