On 12th May 2014, leading provider of payment processing services – Vantiv – announced that it had entered into an agreement with Mercury Payment Systems, to acquire the latter for a sum of $1.65 Billion. Mercury is a payment technology and service leader, majority-owned bySilver Lake, a global leader in technology investing.
“The emergence of integrated payment technology at the point-of-sale delivers a differentiated merchant experience and creates a highly-efficient, cloud-based delivery model for customer acquisition and retention. By combining Mercury’s distribution network and innovative solutions with Vantiv’s technology platform and products, we are developing a payments eco-system that allows us to serve these clients in new and exciting ways,” stated the President and CEO of Vantiv, Charles Drucker, in a press release. “Bringing the companies together will dramatically enhance our distribution and technology capabilities to serve a number of large and growing industry verticals,” he added.
- Vantiv says that it is strategically focused on strengthening as well as expanding its traditional Merchant and Financial Institutions businesses.
- The company continues to invest in strategic partner channels, including integrated payments.
- Vantiv is expected to grow significantly in the integrated payments space to occupy more than 30% of the total payments volume by 2017, according to data from the company.
- This acquisition of Mercury Payment Systems accelerates the growth of Vantiv in the payments space.
- Mercury features an extensive network of more than 3,000 point-of-sale software developers and dealers that serve small and medium-sized businesses across the U.S. and Canada.
- In 2013, Mercury generated net revenue of $237 Mn, registering a 17% y-o-y growth, and adjusted EBITDA of $93 Mn, growing by 23% y-o-y, reports Vantiv’s press release.
- Taking into consideration Mercury’s powerful growth, Vantiv says they expect the transaction to add one to two percentage points to its net revenue growth per year.
"Vantiv and Mercury are aligned in our desire to create integrated software solutions that fulfill the specialized needs of merchants,” stated CEO of Mercury, Matt Taylor, in the same release. “Software developers and dealers are helping to lead the way for the future of payments, and combining with Vantiv puts us in a strong competitive position to jointly offer a broader set of value-added products and services to our partners and merchants,” he added.
The transaction is expected to finish in Q2 of 2014 and will be funded by Vantiv with committed financing. Matt Taylor and the Mercury management team will remain with the company, which is to maintain its current locations in Colorado.
“It has been a privilege to partner with Mercury, and we are very proud of the company’s accomplishments since our investment in 2010,” commented Mike Bingle, a managing director and managing partner of Silver Lake, in the same release. “Mercury pioneered the offering of integrated payments solutions to merchants and has driven rapid growth by leveraging its large network of partners and pursuing innovative new technologies and services.”
Silver Lake has partnered with Mercury on several initiatives to position the company for long-term growth, since 2010. This includes the enhancement of Mercury’s unique technology capabilities as well as expansion into new service lines, industry verticals and product areas.
The lead financial advisor for Vantiv was Credit Suisse along with BofA Merill Lynch. Morgan Stanley was the lead M&A advisor for Mercury with help from Barclays, J.P Morgan. Lipton, Rosen & Katz served as Vantiv’s Legal Advisor as well as Simpson, Thacher & Bartlett.