Vantiv's (VNTV) roughly $10 billion purchase of Worldpay could shake up the overseas payments market and create issues for Jack Dorsey's Square Inc. (SQ) - Get Square, Inc. Class A Report and First Data Corp. (FDC) - Get First Data Corporation Class A Report .
Worldpay Group Plc is a UK payments technology company that generated £4.5 billion ponds ($5.8 billion) in sales from nearly 15 billion transactions last year. The company had a blockbuster £4.8 billion ($7.4 billion) IPO in 2015.
Vantiv shares dropped 2.7% to $60.80 on Wednesday. Worldpay dropped 36 pence to £3.72, after news that it would sell for £3.85 per share, including stock, cash and a 5 pence dividend payment.
The target operates in 146 countries, making it an attractive play for companies looking to broaden their international exposure. JPMorgan Chase & Co. (JPM) - Get JPMorgan Chase & Co. (JPM) Report said that it bowed out of the bidding after early participation.
Vantiv's deal follows Global Payments Inc.'s (GPN) - Get Global Payments Inc. (GPN) Report $4.7 billion purchase of Heartland Payments System Inc. last year and PayPal Holdings Inc.'s (PYPL) - Get PayPal Holdings Inc Report $230 million acquisition of Tio Networks Corp. as companies seek greater geographic coverage, new technology and products or other capabilities to give them an edge.
"At a high-level, you have a number of forces like mobile payments, a surge in e-commerce, and greater security all concurrently accelerating the pace of the change within the payments ecosystem," KeyBanc Capital Markets analyst Josh Beck said in an email. "As a result, you have companies looking to become global franchises with a variety of technology 'tools' to address all of the change sweeping across the industry."
Vantiv's acquisition of Worldpay "fits in very nicely against this backdrop" said Beck, who outlined the logic of the deal in a February note. The merger combines creates a company with a global footprint that can process digital and in-store transactions with a presence in multiple regions, among other factors.
A number of companies could look to make acquisitions or become targets.