Fiserv buys First Data in $22 billion deal

US FinTech giant Fiserv is to buy payments provider First Data Corp in a $22 billion all-stock deal, marking the biggest acquisition of a digital payments firm to date.

In a statement Fiserv said the combined company would be able to offer end-to-end services to financial clients including new methods of handling digital and physical payments, creating one of the world's largest payments and financial technology providers.

The merger will also and serve to expand both companies' range of high value clients along with its footprint in the market, it stated.

“Fiserv and First Data will link their respective merchant and cash management capabilities, further developing new offerings,” the company said.

It added that First Data’s digital merchant account enrolment capabilities would be integrated into Fiserv’s digital banking solutions currently live in thousands of financial institutions around the world.

Fiserv chief executive Jeffery Yabuki will become CEO and chairman of the combined company and First Data CEO Frank Bisignano will become its chief operating officer.

Under the terms of the deal, Fiserv will offer $22.74 per share held by First Data shareholders – a premium of 29 per cent.

Fiserv added that the deal would generate an annual free cash flow of more than $4 billion as well as approximately $900 million of run-rate cost savings and at least $500 million of revenue, leading to enhanced revenue growth.

First Data provides commerce-enabling technology and payments infrastructure to around six million business locations and 4000 financial institutions in more than 100 countries around the world.

It claims to process more than $2.4 trillion in payments per year, equivalent to 3,000 transactions every second.

The digital payments megadeal comes after PayPal offered to buy Swedish Mobile Points of Sales (MPoS) provider iZettle for $2.2 billion in September last year.

The deal is currently the subject of an investigation by the UK Competition and Markets Authority (CMA), which has expressed concerns that it could drive up prices for consumers.

Commenting on the First Data deal, Jeffery Yabuki, president and chief executive of Fiserv said the company expected the deal to “catalyse” enhanced value for both companies’ clients and their customers.

“Through this transformative combination, we expect to redefine the manner in which people and institutions move money and information,” he said.

First Data chairman and chief executive Frank Bisignano said: “Our goal at First Data has always been to provide our clients with the most comprehensive suite of innovative, highly-differentiated solutions and services, and I am excited by the significant value that the combination with Fiserv creates for all stakeholders.”

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