Visa to acquire Earthport for £198m
Visa is splashing the cash again as it will acquire cross-border payments firm Earthport for £198 million.
The board of the UK-based firm is recommending shareholders vote in favour of the deal.
“The all-cash offer from Visa represents a very attractive and immediate return for our shareholders”
Sunil Sabharwal, Earthport chairman, says: “The Earthport board believes the offer by Bidco [a wholly-owned subsidiary of Visa] represents an opportunity for shareholders to realise an immediate and attractive cash value in Earthport today.”
The deal is good timing for the company as it has been enduring a rough patch.
It was founded in 1997 and has 200 employees. But it struggled with its focus (and making money) until 2010, when it had a major senior management and strategy shake-up. Hank Uberoi joined as CEO and had been instrumental in the efforts of turning the company’s fortunes around.
Earthport’s renewed focus concentrated on low-value cross-border payments – its “sweet spot” – a sub-$10,000 payment space that sits just below correspondent banking.
In 2017, however, brought some bad news, with the company’s losses doubling in H2 2017 (to £3.2 million). In December 2017, it warned on sales for H1 2018 (a 10-15% drop in revenue), delays in expected contracts and the loss of a UK line of business with a major e-commerce client.
Uberoi relinquished his chief executive role and became a non-executive director and senior advisor to the CEO. The company embarked on a search for new CEO and chose Amanda Mesler in May. She previously worked at Microsoft and Misys (now Finastra).
In early 2017, Earthport received its New York State money transmitter licence, paving the way for further US expansion. It also stated its interest in the distributed ledger technology (DLT) and is working with Ripple.
With this latest offer from Visa, Mesler explains: “Whilst I believe Earthport is well positioned to deliver the potential it has always possessed, the all-cash offer from Visa represents a very attractive and immediate return for our shareholders.”
For Visa, this follows on from its various investments in 2018.
It took a minority stake in Indian payment gateway BillDesk and invested in Japan-based post-pay credit account Paidy.
It also invested in Israeli start-up Behalf as it targets the SME market with access to capital and financing.
