UK Regulator May Accept Mastercard, VocaLink Moves to Allay Merger Fears
January 18 2017 - 06:35AM
Dow Jones News
By Ian Walker
LONDON--Mastercard Inc. (MA) and VocaLink Ltd. have proposed
measures that could address anti-competition concerns over their
takeover deal, the U.K. Competition and Markets Authority said
Wednesday.
Mastercard and VocaLink have offered to make VocaLink's
connectivity infrastructure available to a new supplier of LINK
payment services and to transfer or license the LINK messaging
system. They have also offered to contribute to LINK members'
switching costs.
The regulator has until March 15 to decide whether to accept
these undertakings, or refer the deal for an in-depth
investigation.
Last July, Mastercard said it was buying 92.4% of VocaLink in a
deal valued at around $920 million.
The CMA raised concerns about the proposal, focusing on a
possible reduction in the LINK scheme's ability to obtain value
when tendering for an infrastructure provider, because VocaLink and
Mastercard are two of the three major providers.
If the deal is completed, a majority of VocaLink's owners will
retain a 7.6% stake for at least three years.
Mastercard U.K. Holdco Ltd., a unit of Mastercard, already owns
and operates credit- and debit-card schemes Mastercard, Maestro and
Cirrus and has 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 participating banks via the LINK network.
VocaLink reported $240 million in revenue in 2016 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, Barclays PLC, HSBC Holdings PLC and Lloyds Banking Group
PLC.
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 if its acquisition by Mastercard didn't go
ahead, to boost competition.
RBS confirmed it would sell its 21.4% shareholding in VocaLink
and book a 150 million pounds ($183 million) pretax gain in its
accounts. Barclays said it had sold 13.68% of its shareholding for
GBP104 million, leaving it with a 1.5% stake.
-Write to Ian Walker at ian.walker@wsj.com
(END) Dow Jones Newswires
January 18, 2017 06:20 ET (11:20 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
MasterCard (NYSE:MA)
Historical Stock Chart
From Feb 2024 to Mar 2024
MasterCard (NYSE:MA)
Historical Stock Chart
From Mar 2023 to Mar 2024