MasterCard has entered into a definitive agreement to acquire 92.4% of VocaLink for $920 million (£700 million).
VocaLink’s existing shareholders have the potential for an earn-out of up to an additional $220 million, if performance targets are met. This transaction is subject to regulatory approval and other customary closing conditions. Under the agreement, a majority of VocaLink’s shareholders will retain 7.6% ownership for at least three years.
Ajay Banga, president and CEO, MasterCard, says:
“VocaLink is a unique company with outstanding technology, assets and people. We look forward to investing in and maximising the technology, and embedding it in our products and solutions, both in the UK and around the world.”
MasterCard says this acquisition accelerates its efforts to be an “active participant” in all types of electronic payments and payment. It will allow MasterCard to “play a more strategic role in the UK payments ecosystem”.
The sale of VocaLink follows the market review of the UK’s Payment Systems Regulator (PSR), published in early 2016, which advised the banks to shed their stakes in the company to “help increase innovation and competition”in the UK’s payments space.
Based in London, VocaLink operates key payments technology platforms on behalf of UK payment schemes, including BACS, Faster Payments and LINK – the UK’s ATM network. It processes over 90% of salaries, more than 70% of household bills and almost all state benefits.
Upon closing of the transaction, David Yates, CEO of VocaLink, will join the MasterCard management committee.
Barclays, HSBC, Lloyds Banking Group and Royal Bank of Scotland (RBS), which currently own about 80% of VocaLink, will receive a handy windfall.
Barclays Plc, one of VocaLink’s five largest shareholders, said in a separate statement that it sold the majority of its stake to Mastercard for 104 million pounds. The U.K.-based bank will be left with a 1.5 percent share, according to the statement.
The deal, Mastercard’s biggest since the company went public in 2006, is subject to approval by European Union and U.K. regulators, Hund-Mejean said. The European Commission will be the first to review the deal, and the group has the ability to forward it to other agencies for their blessing.
The U.K.’s vote in June to leave the E.U. had “absolutely no impact” on the negotiations, which had been going on for months, Yates said during a call with analysts. Brexit also shouldn’t affect VocaLink’s core business in the region, he said.
