MasterCard to buy DataCash for $517 million

MasterCard Inc, the world’s second- biggest payments network, agreed to buy DataCash Group Plc for about £333 million ($517 million) in cash to expand its e-commerce offerings.

DataCash, a UK processor of internet credit-card sales, rose 52 per cent to 355 pence as of 12.12 pm in London trading. MasterCard said the recommended offer of 360 pence a share was a premium of 51.6 per cent on the London-based company’s average closing price of 237 pence for the past month.

“The acquisition of DataCash will expand our already significant e-commerce merchant gateway presence in Asia and Australia to European countries and other high-growth, emerging markets worldwide,” MasterCard Chief Executive Officer Ajay Banga said in a statement distributed by the Regulatory News Service today.

DataCash, which was founded in 1996, provides software to link online retailers with their payment systems. MasterCard and larger rival Visa Inc are facing increased competition from electronic-commerce firms such as EBay Inc’s PayPal. In April, Visa agreed to buy CyberSource Corp, which helps merchants accept online payments and provides security solutions, for about $2 billion in cash.

DataCash said its directors considered the offer “fair and reasonable” and will unanimously recommend it to shareholders.

MasterCard said the deal will be conducted through its MasterCard/Europay UK Ltd unit, which has already received undertakings to vote in favour of the deal from owners of 52 per cent of the stock.

‘Significant opportunity’
“The proposed acquisition represents a significant opportunity for DataCash to drive increased adoption of our platforms and programs internationally,” Chairman Ashley Head said in the statement. “The acquisition represents a significant premium of 65.1 per cent over the average closing price of DataCash for the last six months and represents an opportunity for investors today to realise the potential benefits of the combination.”

Head owns 43.4 per cent of DataCash, giving his stake a value of about £144.5 million under the terms of the deal.