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Mmmmm......
Earthport bought by Visa for £200M - a premium of around 300% to the pre offer price.
Total Revenues £31M of which payment transactions £19M, loss £8M, Value of payments processed £10Bn.
Obviously a system more commercially advanced than Homesend, but EPO doesn't (didn't) have the backing of a major card payments processor to facilitate rapid expansion.
Interesting that the market appeared to significantly undervalue the EPO business.
No, its Mastercard with knockout offer for EP. Will ESG be next?
EPO is now 37p. The Mastercard bid is 33p - so the market thinks the bidding ain't over yet.
Immediately prior to the Visa bid EPO was 7p!
Amazing, but true.
The present bid values EPO at around £220m - effectively peanuts to Mastercard.
I can see how EPO would be valuable to Visa - but where would it fit in to Mastercard as they already have MastercardSend/Homesend?
Or is Mastercard simply trying to deprive Visa of a useful addition to their offering - so if Mastercard gets it it will simply shut it down.
I believe much of Microsofts success was predicated on Bill Gates buying up any rival of significance and then shutting them down - leaving Microsoft ultimately as the only player in the game.
This bidding war perhaps gives an indication of just how valuable ESG may become in time.
Why would Mastercard want 2 cross border payment systems?
So Visa have none.
Yes, I can understand that. Buy up the opposition.
But has anyone done a comparison of the 2 systems?
Is Homesend markedly better than EPO's systems?
Is there any chance the Mastercard would ditch Homesend in favour of EPO's system?
Who knows? Who knows? and Who knows?
Mastercard are maybe just making it expensive or just difficult for Visa. Again, who knows?
But since Mastercard were involved in the development of Homesend, one would assume that it does what Mastercard needs it to do.
That makes sense. They will have ensured the specification meets their exact requirements.
Involved in every stage of the project.
Mastercard has consistently been growing cross border payments at twice the rate of Visa, over the last several years, at around 20% pa vs 10% pa for Visa.
In terms of market capitalization Visa is almost 50% bigger than Mastercard, $300bn vs $200Bn, however Mastercard appears as a company to be growing faster.
https://www.fool.com/investing/2018/05/09/the-acquisition-giving-mastercard-winning-opportun.aspx
Mastercard CEO Ajay Bango in 2018 described Mastercard Send and Homesend combined with Vocalink as the "killer app".
https://www.edisoninvestmentresearch.com/?ACT=18&ID=21152&LANG=
So I'd say it was Visa which is on the back foot here with Earthport, having lost its recommended offer in favour of Mastercard, and presently also losing in a growing market to them.
There is no doubt that there is an international bidding war going on in the banking payments sector at present -
https://www.pymnts.com/news/partnerships-acquisitions/2019/earthport-accepts-mastercard-offer-over-visa/
To me this makes a higher offer for EPO most likely, the only question is will it be incremental or a knock-out bid?
It seems that Visa does not have the luxury of waiting around for whatever else may come on the market, and developing their own system will take time and leave them at a further disadvantage to Mastercard.
It is simply a question of waiting.
Whatever the case the market appears to consistently value ESG lower than it should, just as clearly it has massively undervalued EPO, thus presenting small investors with a significant opportunity.
I don't think visa will hang about - they must have anticipated a counter bid - whether they expected it from major rival Mastercard is another matter.
I await developments with interest, but whichever way it goes it is win win for holders of ESG.
Land Grab - The Times today
https://www.thetimes.co.uk/edition/business/china-tests-may-in-550m-move-for-uk-business-d0638rts6
Behind a paywall - but snippets -
"A Chinese financial services company that was blocked from buying a US money transfer business last year is acquiring World First, a British payments group, in a deal that tests the government’s stance towards foreign takeovers
Neither company disclosed the price that Ant Financial is paying, but it is thought to be about $700 million (£547 million).
“Alipay and World First’s capabilities and international footprints are highly complementary,” a spokesman from Ant Financial said. “The tie-up will add World First’s international online payments and virtual account products to Alipay’s broad range of technology solutions, enabling us to reach a greater number of customers, especially in the fast-growing area of cross border e-commerce."
Yes, it will be interesting to see if that transaction is allowed to go through.
But regardless, it does highlight that Cross border payments is a hot area with the Chinese now joining in.
All bodes well for ESG.
But it still looks like we have quite a few bored holders happy to sell out a bit higher than we were a few months ago.
IMO, looks like the SP may retrace back to around 6.8, so this level looks like it could be a good price to buy more
not sure it will go that low seems to be dropping on very low volume
got a feeling there are some really big buy orders being filled in the background here
buy the dip
Yes, who knows. It is hard to predict price movements on Aim
But 6.8 is a definite recent support level.