Fiserv Acquires First Data in a $22 Billion Deal

Brookfield, Wis.-based financial services powerhouse Fiserv, Inc. and New York-based payment processor First Data Corp announced a definitive merger under which Fiserv will acquire First Data in a $22 billion deal.

Under the terms of the all-stock transaction, First Data shareholders will receive a fixed exchange ratio of 0.303 Fiserv shares for each share of First Data common stock they own (for an equity value of $22 billion). This represents $22.74 based on closing prices as of January 15, and a premium of 29% to the five-day volume weighted average price as of that date. Following the close of the transaction, Fiserv shareholders will own 57.5% of the combined company, and First Data shareholders will own 42.5%, on a fully diluted basis. The all-stock transaction is intended to be tax-free to First Data shareholders.

According to an announcement, the combination of the two fintech giants will lead to a range of payments and financial services, including account processing and digital banking solutions; card issuer processing and network services; e-commerce; integrated payments; and a cloud-based point-of-sale solution. New offerings are expected to also include comprehensive distribution channels and deep expertise in partnering with financial institutions, merchants and billers of all sizes, as well as software developers.

“Through this transformative combination, we expect to redefine the manner in which people and institutions move money and information,” Jeffery Yabuki, president and CEO of Fiserv (which serves over 12,000 clients worldwide including credit unions, banks, savings banks, investment management firms, leasing and finance companies, billers, retailers, merchants, and building societies) said, “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.”

Frank Bisignano, chairman and CEO of First Data (which serves approximately 6 million business locations and 4,000 financial institutions in more than 100 countries around the world) said, “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.” He added “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.”

The combined company propose to link their respective merchant and cash management capabilities, developing new offerings and providing First Data’s Clover cloud-based platforms and Fiserv biller solutions for small and medium-sized businesses. For example, First Data’s digital merchant account enrollment capabilities can integrate into Fiserv’s digital banking solutions.

The combination also generates an end-to-end payments platform from issuance to acceptance and enables additional payment methods that give financial institutions, merchants and billers the ability to meet their customers’ needs across multiple payment vehicles.

Upon closing, Yabuki will serve as CEO/chairman of the combined company. Bisignano will assume the role of president/COO and will serve as director of the board. The combined company expects to invest an incremental $500 million over five years to create significantly enhanced solutions for clients and accelerate growth. The program will focus on a series of new and existing technologies, including next-generation merchant solutions, digital enablement, advanced risk management, and data-focused solutions to keep the combined company at the forefront of evolving client expectations and innovative payment methods.

In the fall of 2018, Fiserv announced it agreed to acquire the debit card processing, ATM Managed Services and MoneyPass surcharge free network of Elan Financial Services, a unit of U.S. Bancorp, to deepen its presence in debit card processing, and expand its mobile and digital payments offerings for consumers and businesses. Through this transaction, Fiserv expected to build on the growth of its card services business by expanding its suite of solutions in key areas such as ATM Managed Services and add MoneyPass, described as the second largest surcharge-free network in the United States with access to more than 33,000 ATMs nationwide, to further enhance its market position.

Fiserv also announced the collaboration with Miami-based DadeSystems to provide financial institutions with the capabilities to automate accounts receivables processing for businesses, with Fiserv serving as a connection point through which institutions can access DadePay AR Automation as a software-as-a-service solution. Financial institutions can offer the solution as a standalone service or as a complement to the commercial banking suite from Fiserv.