J.P. Morgan makes European Fintech move with Worldpay approach
J.P. Morgan Chase made a preliminary approach to acquire U.K. payments business Worldpay Group, potentially marking one of the biggest deals for a U.S. bank since the financial crisis and reflecting banks' growing confidence in a shifting regulatory environment.
The board of Worldpay on Tuesday said it had received preliminary approaches from J.P. Morgan and also from Vantiv, a U.S.-based credit-card processor. The board said there is no certainty an offer will be made; the two parties have until Aug. 1 to announce whether they intend to make an offer. As of Monday evening -- before the approach was disclosed -- Worldpay had a market value of $8.2 billion.
The expression of interest by the biggest U.S. bank by assets comes just days after J.P. Morgan and peers were given a regulatory green light to return billions of dollars of capital to shareholders via increased dividends and share buybacks. That news bolstered U.S. bank stocks, which had risen sharply in the wake of Donald Trump's electoral victory last November.
Like other big banks, J.P. Morgan has forgone sizable deals since the crisis when it bought Bear Stearns and Washington Mutual in distressed sales. Bank executives and analysts said the postcrisis political and regulatory climate, which was hostile to banks believed to be "too big to fail," made deal-making by the biggest firms virtually impossible.
But the Trump administration has vowed to loosen the shackles on banks and is in the process of putting its nominees, some former bankers, into key oversight posts at the Federal Reserve and other regulatory agencies.
"We've seen with the recent stress-test results that the regulators have clearly indicated a more comfortable position with banks' returning and using excess capital right now," said Douglas Landy, a partner at law firm Milbank, Tweed, Hadley & McCloy LLP who focuses on financial-services regulation. "And if you can just return it to your shareholders then why can't you use it for strategic acquisitions? In some ways that's a better way to use it: shore up your business model in a traditional space."
Mr. Landy said there also may be more regulatory leeway on this type of acquisition since it isn't a bank buying a bank or a consolidation of lending or other core banking functions. Instead, this is more targeted in a part of the industry that is undergoing a lot of change, especially through technology.
J.P. Morgan's move shows the growing interest among big banks in harnessing technology -- whether by building it or buying it -- before it disrupts their businesses. In this, J.P. Morgan has been particularly active, creating Chase Pay, a person-to-person payments transfer system meant to rival that of PayPal Holdings Inc. and launching a high-end rewards credit card that has challenged the premier offering of American Express Co.
Worldpay processes millions of payments daily in stores, online and on cellphones, predominantly in the U.K. and the U.S. Its shares soared 28% Tuesday. A person familiar with the company said both the approaches from Vantiv and J.P. Morgan were unsolicited.
Write to Max Colchester at max.colchester@wsj.com and Emily Glazer at emily.glazer@wsj.com