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Fiserv Announces Plans to Acquire First Data in $22 Billion Deal

A giant will roam the fintech land as Fiserv will acquire First Data in an all-stock transaction of $22 billion, reports Antony Peyton of Fintech Futures (Finovate’s sister publication).

With the combined power, Fiserv will be able to offer a range of payments and financial services, including account processing and digital banking solutions; card issuer processing and network services; e-commerce; integrated payments; and the Clover cloud-based point-of-sale solution.

Jeffery Yabuki, president and CEO of Fiserv, said: “We admire First Data for its excellence in merchant acquiring and global issuing services, and the tremendous progress they have made under Frank’s [Bisignano, CEO] leadership.”

Some deals from last year for First Data include Ellie Mae, Mastercard and SIA.

As an example of how they will link up, Fiserv says First Data’s digital merchant account enrollment capabilities can be integrated into its digital banking solutions.

The new entity expects to invest an incremental $500 million over five years. Fiserv reckons growth will come from areas such as bank merchant services and Clover, credit processing, and additional biller services.

The program, when up and running, will focus on a series of new and existing technologies, including merchant solutions, digital enablement, risk management, and data-focused solutions.

The new company expects to generate free cash flow exceeding $4 billion in the third year following close, and generate $900 million of run-rate cost savings, “driven primarily by the elimination of duplicative corporate structures.” The latter of course means job cuts. Firms always say it so coldly.

Fiserv intends to refinance the $17 billion of debt that First Data is expected to have at the time of closing, and has entered into a committed bridge financing arrangement in connection with the transaction.

Yabuki will serve as CEO and chairman of the board of directors of the combined company. Bisignano will assume the role of president and chief operating officer, and will serve as director of the board of the combined company.

The transaction, to close during the second half of 2019, is subject to customary closing conditions and regulatory approvals, including the approval of shareholders of both companies. The transaction is not subject to any financing conditions.

Founded in 1984 and headquartered in Brookfield, Wisconsin, Fiserv demonstrated its Commercial Center: Security solution – partnership with Samsung SDS – at FinovateSpring 2018. Earlier this month, the company announced signing a trio of new bank partners, bringing Fiserv’s total number of new bank clients to more than 80 in the past two years.