Where to invest your Worldpay takeover proceeds

Shareholders are about to get a mixture of cash and shares as acquisition by Vantiv is approved
Thursday 11 Jan 2018 Author: Daniel Coatsworth

Shareholders in payment processing group Worldpay (WPG) will receive a mixture of cash and shares later this month in relation to the FTSE 100 member’s takeover by US peer Vantiv.

They will get shares in the enlarged business which will be renamed Worldpay Inc and be listed on both the London and New York stock exchanges.

WHAT ARE THE TERMS OF THE DEAL?

Worldpay shareholders will receive 55p in cash, 0.0672 new shares and additional 4.2p cash as a special dividend for each Worldpay share they own. The cash component represents approximately 13% of Worldpay’s market value.

Worldpay’s current shares will be suspended from trading on 15 January. The cancellation of the old shares and admission to trading of the new shares will happen on 16 January. The cash payments are scheduled to be made on 30 January.

WHAT WILL THE ENLARGED BUSINESS DO?

Vantiv and Worldpay look like they will fit well together. Vantiv is the number one merchant acquirer in the US, specialising in the retail, restaurant, grocery and drug sectors, and business-to-business markets. Worldpay specialises in digital services, the travel sector and online retail, and is the number one merchant acquirer in the UK.

The combined business will be the number one global acquirer, according to a presentation by the two companies.

They cite ‘significant opportunity’ to cross-sell business-to-business services into the combined customer base, plus expand integrated payments into the UK and across Europe.

DECISION TIME FOR INVESTORS

Worldpay shareholders have a choice with what to do with the proceeds of the Vantiv deal:

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Shareholders wishing to use the cash component, and potentially sell some or all of their new Worldpay shares to generate additional cash to make other investments, may wish to look at alternative ways of playing growth in the e-commerce sector.

For example, the rise in people returning items ordered online plays into the strengths of Clipper Logistics (CLG) which helps the likes of ASOS (ASC:AIM) and Superdry (SDRY) with their e-fulfilment and returns management.

Polar Capital Technology Trust (PCT) may interest someone looking for diversified exposure to some of the biggest names in digital industries including e-commerce.

The investment trust’s top holdings include retail giant Amazon, Google’s parent company Alphabet, Apple, Microsoft and Chinese e-commerce, retail and technology conglomerate Alibaba. (DC)

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