£28m windfall for bank in ATM mega-deal
THE Manchester-based Co-operative Bank stands to make £28m from selling its 3.3% stake in VocaLink – the payments company that runs the UK’s entire ATM and BACS clearing network – to Mastercard.
The deal will see MasterCard buy 92.4% of VocaLink for £700m, valuing the company at £757.6m. There is also an additional earn-out of up to £169m if performance targets are met.
Based in London, VocaLink operates payments technology platforms on behalf of UK payment schemes, including BACS, Faster Payments and LINK, the UK’s ATM network. It also licenses its software and provides services in Sweden, Singapore, Thailand and the US.
In 2015, the company reported revenues of £182m as it processed more than 11 billion transactions.
A group of 18 banks, including the Co-operative Bank, own VocaLink but in February the UK’s Payment Systems Regulator ordered them to sell off the company.
Co-op Bank is a 3.3% shareholder and the sale would net it £25.1m cash, with a further earn out consideration of up to £3.2m payable in 2019.
For the year ended 31 December 2015, the bank did not receive any dividends from VocaLink. Its shares in VocaLink are held as available-for-sale financial instruments valued at £2.4m in its 2015 accounts.
Ajay Banga, president and chief executive of MasterCard, said:” We’re excited about the opportunity to play a bigger role in payments in the UK, a very strategic market for us. 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.”
David Yates, chief executive at VocaLink, said: “Today’s announcement is positive news for our partners, customers and employees. 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.”
Completion is expected before the second quarter of 2017 and is subject to certain conditions precedent and regulatory approvals.
