J.P. Morgan, Vantiv Make European Fintech Move With Approach to Worldpay--2nd Update

By Max Colchester Features Dow Jones Newswires

J.P. Morgan Chase & Co. made a preliminary approach for U.K. payments business Worldpay Group Inc., potentially marking one of the biggest deals the U.S. bank has done since the financial crisis.

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On Tuesday the board of Worldpay said in a statement that it had received preliminary approaches from J.P. Morgan and Vantiv Inc., a U.S.-based credit-card processor. The board noted that there is no certainty that an offer will be made, the two parties have until Aug. 1 to announce whether they intend to make an offer. J.P. Morgan declined to comment. A spokesperson for Vantiv wasn't immediately available for comment.

Worldpay processes millions of payments daily in stores, online and on cellphones, predominantly across the U.K. and the U.S. As of Monday evening--before the approach was disclosed--it had a market value of GBP6.39 billion ($8.24 billion). Its shares soared 22% in morning trading following the news.

Payments businesses have recently been popular acquisition targets. Banks and payment companies are racing to retool their offerings as customers increasingly turn to card and mobile devices to pay for goods.

Meanwhile, with processing fees being squeezed by regulators and the rising competition from technology startups, incumbents are trying to gain heft to generate economies of scale, analysts say. Worldpay's European rival payment company Nets A/S said last weekend that it had been approached by suitors. In April, Mastercard Inc. got the green light from regulators to acquire payment technology firm VocaLink Holdings Ltd. for about $920 million.

J.P. Morgan already runs a European payments business, which is based in Ireland, and processes some 40 million credit and debit transactions a day.

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Like other banks J.P. Morgan has been reshaping its business predicting customers will move away from credit cards and simply pay with their cellphones. In 2015 J.P. Morgan announced an overhaul of its Chase Pay product to better compete with the likes of PayPal Holdings Inc. The bank has joined with a number of U.S. retailers to push its payment app. While the bank has made a series of smaller financial technology acquisitions in recent years, it has so far held off from big-ticket deals.

Worldpay was owned by Royal Bank of Scotland Group PLC until 2010, when the bank was forced to sell the business following its taxpayer bailout. Worldpay was then bought by private-equity groups Advent International and Bain Capital, who listed it in 2015.

The business has been growing strongly, posting a 15% increase in revenue to GBP4.54 billion in 2016. A person familiar with the company said that the approach from Vantiv and J.P. Morgan was unsolicited.

Write to Max Colchester at max.colchester@wsj.com

(END) Dow Jones Newswires

July 04, 2017 08:30 ET (12:30 GMT)