Mastercard Inc (NYSE:MA) announced that it has entered into a definitive agreement to acquire 92.4 percent of VocaLink Holdings Limited for about £700 million (approximately US$920 million), after adjusting for cash and certain other estimated liabilities. VocaLink’s existing shareholders have the potential for an earn-out of up to an additional £169 million (approximately US$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 percent ownership for at least three years.
Based in London, VocaLink operates key payments technology platforms on behalf of UK payment schemes, including:
- BACS – the Automated Clearing House (ACH) enabling direct credit and direct debit payments between bank accounts
- Faster Payments – the real-time account-to-account service enabling payments via mobile, internet and telephone
- LINK – the UK ATM network
In addition, VocaLink offers innovative products with global potential, including ZAPP, a mobile payments app that leverages Fast ACH technology, and licenses its software and provides services to support ACH activities in Sweden, Singapore, Thailand and the United States. In 2015, the company reported revenues of £182 million as it processed more than 11 billion transactions.
This acquisition accelerates MasterCard’s efforts to be an active participant in all types of electronic payments and payment flows and to enhance its services for the benefit of customers and partners. It will allow MasterCard to play a more strategic role in the UK payments ecosystem, while bringing the innovation and knowhow from across the globe back to VocaLink’s home market. The result will be even more choice in how consumers, merchants and governments make and receive payments.
“We’re excited about the opportunity to play a bigger role in payments in the UK, a very strategic market for us,” said Ajay Banga, president and CEO, MasterCard. “VocaLink is a unique company with outstanding technology, assets and people. We look forward to investing in and maximizing the technology, and embedding it in our products and solutions, both in the UK and around the world.”
VocaLink supports and expands the products and services MasterCard offers issuers, governments and merchants, giving them even more relevance and touchpoints with the end consumer. It will be the first true combination of the traditional person-to-merchant cards business with a clearing business, which when fully developed, presents an additional opportunity to make a deeper and sustained shift from the use of cash and checks in business, government and personal payments.
“Today’s announcement is positive news for our partners, customers and employees,” said David Yates, CEO, VocaLink. “We will continue to focus on ensuring that the UK systems perform seamlessly, maintaining the highest levels of quality. At the same time, we’ll invest in further innovation to power competitive payments solutions for consumers and businesses around the globe.” (Original Source)
Shares of Mastercard closed yesterday at $93.3, up $0.92 or 1.00%. MA has a 1-year high of $101.76 and a 1-year low of $74.61. The stock’s 50-day moving average is $92.47 and its 200-day moving average is $91.57.
On the ratings front, Mastercard has been the subject of a number of recent research reports. In a report issued on July 19, Oppenheimer analyst Glenn Greene reiterated a Buy rating on MA, with a price target of $104, which represents a potential upside of 11.5% from where the stock is currently trading. Separately, on July 18, Goldman Sachs’ James Schneider maintained a Buy rating on the stock and has a price target of $118.
According to TipRanks.com, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Glenn Greene and James Schneider have a total average return of 21.3% and 10.6% respectively. Greene has a success rate of 82.2% and is ranked #1 out of 4073 analysts, while Schneider has a success rate of 60.0% and is ranked #540.
The street is mostly Bullish on MA stock. Out of 14 analysts who cover the stock, 13 suggest a Buy rating and one recommends to Hold the stock. The 12-month average price target assigned to the stock is $109.09, which represents a potential upside of 16.9% from where the stock is currently trading.