US payment processor Vantiv to buy Mercury Payment Systems for $1.65 bn

US payment processor Vantiv Inc yesterday struck a deal to buy its smaller rival Mercury Payment Systems from private equity firm Silver Lake Group for about $1.65 billion.

The agreed deal will see Mercury suspend its proposed initial public offering plan, which would have valued the Colorado-based company at $2.5 billion.

Silver Lake had acquired a majority 62 per cent stake in Mercury in 2010 for an undisclosed amount while founders Marc Katz and Jeffrey Katz and investor Larry Stone held the remaining stake.

According to the IPO filing, Mercury had $237 million in revenue in 2013.

Founded in 2001, Mercury, with a network of more than 3,000 point-of-sale software developers and dealers that serve small and medium-sized businesses, is one of the fastest growing payment technology companies in the US.

Its payments technology is integrated into a broad set of point of sale systems, reaching merchants through its extensive partner network.

Mercury's customer service and value-added solutions help merchants conduct business of over $30 billion per year.

With a market value of about $5.6 billion, Vantiv, formerly a unit of Ohio-based US regional bank Fifth Third Bancorp, is a leading, integrated payment processor with proprietary technology platform.

The Ohio-based company is the third-largest merchant acquirer and the largest PIN debit acquirer based on number of transactions in the US.

Vantiv's core products are debit, credit, prepaid, check, mobile services, compliance, fraud and data security, loyalty programs, payment terminals and gateways, and advisory services.

Vantiv said that the acquisition will accelerates its growth in the integrated payments space, which is expected to increase significantly over the next several years to potentially represent over 30 per cent of total payments volume by 2017.

Charles Drucker, president and CEO, Vantiv''The emergence of integrated payment technology at the point-of-sale delivers a differentiated merchant experience and creates a highly-efficient, cloud-based delivery model for customer acquisition and retention,'' said Charles Drucker, president and chief executive officer of Vantiv. ''By combining Mercury's distribution network and innovative solutions with Vantiv's technology platform and products, we are developing a payments eco-system that allows us to serve these clients in new and exciting ways. Bringing the companies together will dramatically enhance our distribution and technology capabilities to serve a number of large and growing industry verticals.''

''By combining Mercury's distribution network and innovative solutions with Vantiv's technology platform and products, we are developing a payments eco-system that allows us to serve these clients in new and exciting ways. Bringing the companies together will dramatically enhance our distribution and technology capabilities to serve a number of large and growing industry verticals,'' he added.

Since 2010, Silver Lake has partnered with Mercury on several initiatives to position the company for long-term growth, including the enhancement of Mercury's unique technology capabilities and expansion into new product areas, service lines and industry verticals.

Matt Taylor, CEO, Mercury PaymentsVantiv's acquisition of Mercury and the prior acquisition of Element Payment Services, builds upon Vantiv's existing distribution channels, which will increase the ability to provide an expanded set of payments solutions, such as online and omni-channel commerce, to technology partners and dealers. Mercury further expands Vantiv's reach into the small and medium-sized business segment through Mercury's distribution channel, complementary verticals and its ability to design integrated, value-added innovations for the point-of-sale.

"Vantiv and Mercury are aligned in our desire to create integrated software solutions that fulfill the specialised needs of merchants,'' said Matt Taylor, chief executive officer of Mercury. ''Software developers and dealers are helping to lead the way for the future of payments, and combining with Vantiv puts us in a strong competitive position to jointly offer a broader set of value-added products and services to our partners and merchants.''