A Blackstone and CVC bid for Paysafe was announced on Friday. The £2.86 billion ($3.7 billion) bid represents an approximately 9% premium over the UK-listed company’s closing price on Thursday. Blackstone and CVC Capital Partners are private equity firms based in New York and Luxembourg respectively.
Paysafe is a UK online payments service operating from the Isle of Man. It also provides the NETBANX payment gateway and the Neteller e-payments service. Paysafe also operates the award-winning Net+ prepaid MasterCard. Paysafe stated that it was paying $470 million to purchase the Texan firm Merchants Choice Payments Solutions.
The expansion of mobile payments has led a number of banks and credit card firms to take a keen interest in online mobile payments systems. This is just one of several such takeovers and mergers involving mobile payment companies. An initial offer was made by Blackstone and CVC in May, but this was rejected.
The new bid was £5.90 per share. Because of this, the takeover was publicly recommended by Paysafe’s largest investor, the London UK asset management firm Old Mutual Global Investors. Traditional banks have been very slow in reacting to the significant switch of the consumer from the mall to online shopping.
Companies such as Paysafe, PayPal and Worldpay took advantage of this tardiness. Firms such as these have lately tied up the market for convenient online payment systems. Internet shopping and cashless transactions are rapidly becoming the norm and traditional banks are struggling to catch up.
Credit card processing company Vantiv recently reached an agreement to purchase Worldpay for £7.7 billion. This is just one example of how banks are working to catch up with businesses created to handle online transactions. They must react quicker. There has been a rapid increase in the use of mobile payment systems to select and pay for purchases that can be delivered online.
The post-Brexit drop in the value of the UK pound gave a dollar and euro-based economies access to UK businesses at relatively low prices. Regarding CVC Capital, this company had a need to demonstrate to investors how well it is using the capital it has accumulated: a total of €16 billion recently. Blackstone assets grew by $371 billion in the second quarter of 2017. However, it too will likely be pressed by investors to use that money to generate more.
The Blackstone and CVC bid for Paysafe Group was welcomed by the latter. It is beneficial to both buyer and seller. That said, it should be accepted that this is just one of the many such takeovers and mergers that will take place over the coming months. However, it should also be clear that these are not hostile takeovers. On the contrary, they are welcomed by both parties involved in the transaction.
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