The UK’s Competition and Markets Authority (CMA) has launched a phase 1 merger inquiry into Visa’s £247m ($325m) proposed acquisition of fintech company Earthport.
Image: CMA launches phase 1 merger inquiry into Visa’s transaction with Earthport. Photo: courtesy of Tony Hisgett from Birmingham, UK/Wikipedia.org.
The competition watchdog said that it will investigate whether the transaction between Visa and Earthport will have any impact on the competition in the UK markets for the goods and services offered by the two companies.
The CMA has announced the launch of its merger inquiry by issuing a notice to the two parties. It is also seeking written representations about any competition issues that are likely to emerge from the proposed transaction and has given a timeline of 4 April to 18 April 2019 for interested parties to give their feedback.
CMA has fixed a deadline of 4 June 2019 for taking the phase 1 decision on the merger.
The competition watchdog, in a statement, said that it “is considering whether it is or may be the case that this transaction, if carried into effect, will result in the creation of a relevant merger situation under the merger provisions of the Enterprise Act 2002 and, if so, whether the creation of that situation may be expected to result in a substantial lessening of competition within any market or markets in the United Kingdom for goods or services.”
Headquartered in London, Earthport is involved in enabling cross-border payments. The British fintech company, which has regional offices in New York, Miami, Dubai and Singapore, provides its clients access to a global payment network.
The payments firm maintains local banking partnerships under which client business is directly settled through local clearing to banked beneficiaries in over 87 countries.
Founded in 1997, Earthport’s clients include Bank of America Merrill Lynch, Japan Post Bank, TransferWise, HSBC, and Xoom – the international money transfer service of PayPal, and Western Union.
In February, Visa, through its subsidiary Visa International Service Association (Bidco), offered to acquire the UK company for 37p per share in an all-cash deal. Prior to that, the payments technology giant proposed a bid of about £198m, or 30p per share, to Earthport in January.
The bid was raised by Visa after its rival Mastercard entered the race in late January by offering around £233m to acquire the payments firm in an all-cash deal.
Earlier in April, Mastercard dropped its bid to acquire Earthport after it signed a deal to take over cross-border payments network provider Transfast for an undisclosed price.