Visa as just announced it is buying British cross-border payments processor firm Earthport, for £198 million, reported Reuters on December 27, 2018.
Visa Inc (V.N) has announced it is buying Earthport Plc (EPO.L), a British company enabling cross-border transactions for banks and financial businesses using the blockchain technology. The deal is going to cost 198 million pounds, as reported by Reuters.
According to the report, Visa International Service Association, one of the company’s branches has offered 30 pence for each Earthport share. Strangely enough, the price offered by Visa was about four times above the stock’s Monday closing price of 7.45 pence.
Right after the offer, the Earthport shares surged and matched the offered price. Earthport considered the Global Payments Provider proposal more than “fair and reasonable” and recommended its shareholders to take up the offer. While Rothschild & Co was responsible for giving financial advice to Earthport on the deal, Goldman Sachs was the group in charge of advising Visa.
An Escape for Earthport
Earthport counts with clients like Bank of America Merrill Lynch and Japan Post Bank and provides a cross-border payments service that uses the Ripple network. 2018 was a rough year for the British cross-border payments service which saw its listing on the London Stock Exchange’s secondary market, falling around 28 percent while reports of growing losses and expenses forced the company to go for an upside turn and a fundamental change on its strategy.
Earthport says its biggest value is the possibility of offering a lower-cost alternative to traditional payments systems. The company’s alternative is set on putting banks and money transfer firms in only one channel instead of presenting several different channels that would otherwise delay or hinder the process of making international transactions.
Visa Reinforces its Position as an Industry Leader
As for Visa, the company foresees the increase of cross-border payments or transactions that involve parties in two or more countries, which needs to be satisfied and as such the company is set to go the extra mile to become the industry leader. Last October, Visa said the volume of cross-border payments suffered an increase of around 10 per cent throughout 2018.
Earthport, says that Visa’s proposal was revised following an indicative offer from the U.S. company last month and saw the offer as the perfect solution for the fundamental change the company was in need to go through.