Brookfield-based payments provider Fiserv is merging with Atlanta’s biggest payments provider, First Data, in a $22 billion all-stock deal.
The merger was approved by both companies’ boards of directors, and the combined company will be called Fiserv. The deal is projected to close during the second half of 2019.
Fiserv’s president and CEO Jeffery Yabuki will serve as the new combined company’s CEO and chairman of its board of directors. Frank Bisignano, chairman and CEO at First Data, will serve as the company’s president, COO and director of the board.
“Through this transformative combination, we expect to redefine the manner in which people and institutions move money and information,” Yabuki said in a statement. “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.”
Though both companies are among the largest payment providers in the nation, there are some differences to these fintech giants. Fiserv provides software and services to banks, thrifts, credit unions, securities broker dealers, leasing and finance companies and retailers. Meanwhile, First Data provides payments across millions of retail point of service, ATM and online outlets.
“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,” Bisignano said in a statement. “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.”
First Data shareholders will receive a tax-free, fixed exchange ratio of 0.303 Fiserv shares for every First Data stock they own, bringing the full equity value to $22 billion. Current Fiserv shareholders will own 57.5 percent of the combined company, with First Data shareholders owning 52.5 percent of the company, on a fully diluted basis.
“We expect the combined company to retain our current investment-grade ratings based on our strong financial profile and excellent free cash flow,” Yabuki said. “Together, this should provide the basis for continued disciplined capital allocation, including debt repayment and share repurchase.”
