Mastercard has dropped its bid for Earthport to focus on its acquisition of Transfast.
Over the festive period, Visa jumped on the bandwagon and made a surprise £198m ($257m) bid for Earthport. The offer was immediately recommended by the company’s board and put forward to shareholders.
And so, the bidding war began. Mastercard made another offer for £233m. This deal was at a 10% premium to Visa’s offer. Subsequently this forced Visa to return with an improved £247m deal.
Earthport was founded in 1997. It first developed lottery games and then later went on to produce technology to support businesses to make international payments.
Its cross-border payments capabilities enable banks and other financial firms to operate through a single relationship instead of the complexity of going through multiple ties with various payments channel.
The two rivals made deals after a difficult year for Earthport. Earthport reported operating losses of £8.4m for the year to June 2018 on revenues of £31.9m.
Mastercard’s fight for Earthport over
Mastercard stated that it needs to focus on “the integration and expansion of Transfast.”
With the acquisition, Transfast will increase Mastercard’s connectivity in the account-to-account space. Furthermore it will enhance compliance capabilities and offer more robust foreign exchange tools. Currently, Transfast supports the Mastercard Send solution for business-to-business and person-to-person payment services.
Chief product officer for Mastercard, Michael Miebach, “We believe Transfast gives us the strongest platform to immediately enhance our cross-border capabilities and further deliver on our strategy.
“The addition of Transfast adds to our leading position in meeting business, government and consumer payments needs – whether B2B, P2P or other flows. Today’s news cements our collaboration and sets the stage to provide our customers a unique, ready-to-go solution upon closing.”
CEO of Transfast, Samish Kumar, commented:
“There are substantial synergies with Mastercard for even further growth across our products.
“Over the past 12 years, we have grown our capabilities to connect, track and settle transactions with almost every bank around the world via our curated and extensive network. We’ve worked in support of Mastercard Send and this feels like the natural next step in our relationship.”