Worldpay’s puny pledges
BRITISH fintech leader Worldpay will seek to convince investors in the coming week that the £7.7bn bid by American rival Vantiv is a terrific deal and should not be resisted.
In the effort to persuade stakeholders that this is not a takeover but a merger, there will be a series of commitments.
This probably will include a pledge to maintain the Worldpay name at the top company, a secondary quote for the group’s shares in London, some kind of headquarters in the UK and Softbank-style job promises. None of this should go unchallenged.
Worldpay is a global leader in online payments systems, operating in 146 countries and 126 currencies. Clients include Google and other digital giants.
In contrast, Vantiv has grown big on pointof-sale technology in the US at a moment when commerce is switching online. So which company has the better business?
Worldpay shareholders might also question a little more the meanness of a 21pc premium now that a dividend has been thrown in.
Not of much consequence to chief executive Phil Jansen, who took £30m-plus out of the enterprise at flotation and might be as happy about working in Cincinnati or New York as in London.
What we do know, of course, is that if the deal is done, command and control will move from the UK to the US and Britain will be deprived of building a digital champion to rival Silicon Valley and China.
Britain’s great research universities and software skills might outshine much of the world, but it becomes a wasted resource and investment when the benefits and wealth creation take place elsewhere.
If the Government wants to end the selfimmolation of tech takeovers, there was never a better case for intervention than Worldpay, a company born at Royal Bank of Scotland and brought to fruition by judicious investment. Instead, head buried in the sand, the Cabinet continues to feud about Brexit as prosperity drains away. Cruz control THe big difference between British Airways owner IAG and other european carriers is that it has a chief executive in Willie Walsh who has been willing to take on the unions in one of the last private sector bastions of old-style labour practices.
The consequence is a sharp uplift in firsthalf operational profits and the promise of a double-digit increase in the second half.
As ever, the core of BA’s income remains the transatlantic routes, where IAG is increasing its presence with flights from Barcelona using its low-cost carrier Level.
The vision of IAG coining it with pre-tax profits up 13.8pc in the six months to June at £871m cannot but aggravate the 75,000 passengers at Heathrow and around the world whose easter holidays were devastated by an IT snafu and electrical failure.
The report into the causes of the meltdown is still some weeks away and is likely to make recommendations for a bulletproof system. As worrying as the computer failure was BA’s treatment of customers, with Spanish chief executive Alex Cruz nowhere to be seen as the saga unfolded.
His cost-cutting leadership, introducing BA customers to M&S sandwiches and shrinking leg-room, had tarnished BA’s image before the systems implosion.
Walsh needs to order a mid-course correction if the carrier’s competitive edge is to remain intact. Barclays bother THe unanswered question at Barclays is whether chief executive Jes Staley will be allowed by regulators to carry on with his strategic reforms.
No one questions Staley’s credentials or direction of travel, but his poor handling of a whistleblower left a lot to desire.
At times it seems that ten years after the start of the financial crisis, UK High Street banks are continuously swimming through mud. Pre-tax profits of £2.3bn at Barclays were turned into a £1.3bn loss after more payment protection insurance payouts and big restructuring costs associated with retreat from Africa.
Staley has set great store by remaining a big player in investment banking. But that didn’t quite come off in the first half because a lack of volatility held back trading.
The bank is not even at the starting post when it comes to doing a deal with the US Department of Justice over mortgage securities.
Oh dear.