UK Regulator Sees Competition Concerns over Mastercard, VocaLink Merger
January 04 2017 - 4:29AM
Dow Jones News
By Ian Walker
LONDON--The U.K. Competition and Markets Authority said
Wednesday it is concerned that Mastercard Inc.'s (MA) acquisition
of VocaLink gives rise to competition concerns, and is seeking
undertakings from the companies to address these issues.
They now have until Jan. 11 to offer a solution, or the
regulator will refer the deal for an in-depth investigation, it
said.
Last July MasterCard said it was buying 92.4% of VocaLink
Holdings Ltd. in a deal valued at about $920 million. If the deal
completes, a majority of VocaLink's current owners will retain a
7.6% stake for at least three years.
MastercardU.K. Holdco Ltd., a subsidiary of Mastercard already
owns and operates credit and debit card schemes Mastercard, Maestro
and Cirrus, and has also bid to supply infrastructure services to
U.K. interbank payment systems.
VocaLink's technology provides the backbone for non-card
transactions such as employer payroll deposits and consumer bill
payments, processing over 90% of salaries, more than 70% of
household bills and almost all state benefits in the U.K.
It also unites the infrastructure of Britain's automated teller
machine network among its participating banks. VocaLink reported
$240 million in revenue last year and processed more than 11
billion transactions.
Vocalink is owned by a consortium of 18 banks and building
societies, with the four biggest being Royal Bank of Scotland Group
PLC (RBS.LN), Barclays PLC (BARC.LN), HSBC Holdings PLC (HSBA.LN),
and Lloyds Banking Group PLC (LLOY.LN).
Last July, after the deal was announced the U.K. Payment Systems
Regulator said the four largest shareholders of VocaLink should
sell all, or part of their holdings in the infrastructure provider
if its acquisition by MasterCard doesn't go ahead, to open up the
market and boost competition.
At the time of the deal, RBS confirmed it would sell its 21.4%
shareholding in VocaLink and book a 150 million pound ($184.08
million) pretax gain in its accounts. Barclays also said it has
sold 13.68% of its shareholding in VocaLink for GBP104 million,
leaving it with a 1.5% stake.
-Write to Ian Walker at ian.walker@wsj.com; @IanWalk40289749
(END) Dow Jones Newswires
January 04, 2017 04:14 ET (09:14 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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