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Visa International Service Association, a unit of Visa Inc. known as Bidco, has agreed to pay 198 million pounds for Earthport Plc., a U.K. firm that provides international transactions for businesses and banks, according to a press release.
Bidco's offer of 30 pence per share is four times the stock's Monday closing price of 7.45 pence, according to Reuters. Earthport shares rose in early trading Thursday and matched the offer price.
The London-based firm called the Bidco proposal "fair and reasonable" and said it would recommend its shareholders accept the all-cash offer. The offer allows Earthport shareholders to crystallize in cash the value of their holdings at an implied multiple of 5.3 times Earthport's revenues for 2018, at a premium of 250 percent to Earthport's 6-month volume weighted average share price to Dec. 24, 2018, according to the press release.
"The Earthport board believes the offer by Bidco represents an opportunity for shareholders to realize an immediate and attractive cash value in Earthport today," Sunil Sabharwal, Earthport chairman, said in the press releaese. "Visa shares our vision of growth and expansion for Earthport and, as such, we believe it is a suitable and appropriate partner for our employees, partners, customers and other stakeholders.”
Earthport's shares, which are listed on the London Stock Exchange's secondary market, fell more than 28 percent this year as a result of rising losses and expenses, according to Reuters, causing the firm to state last month that "fundamental" change was needed in its strategy.
Through a single relationship with Earthport, clients can seamlessly manage payments to almost any bank account in the world, reducing costs and complexity to meet customers' expectations of price, speed and transparency, the press release stated. The company offers clients access to global payment capability in more than 200 countries and territories, with local automated clearing house options in 88 countries and an evolving suite of currencies and settlement options
Visa's mission is to connect the world through the most innovative, reliable and secure payment network, according to the press release. The company's global processing network, VisaNet, is capable of handling more than 65,000 transaction messages a second.