For shareholders of Worldpay, it could soon be World Payday.
FTSE 100 Bid Target
There is nothing like the sight of a FTSE 100 company being in focus as a takeover situation. This is especially the case if it is not one where either the company’s management block a deal so they can keep their jobs (Unilever, Akzo Nobel), we get trapped by competition regulators trying to justify their jobs (Tesco/Booker), or politicians trying to win votes (21st Century Fox/Sky). Indeed, as far as the UK’s payments processor Worldpay (WPG.L) is concerned, one would imagine that everything should run smoothly – apart from haggling over the price.
The Nets A/S Aftermath
It helps that we are trading in the immediate aftermath of sector peer Nets A/S (NETS.CO) revealing a possible takeover yesterday. Interestingly enough, none of the mainstream media, usually so quick to grab the glory, has really pointed out how the payments mini sector is in dire need of consolidation. It has also not even thought out that Worldpay was and is a rather more juicy target than “overpriced” Nets A/S has been since its rather tortuous (largely sub DKK 150 IPO) journey.
In addition, there has not been that much newsflow regarding Worldpay, with its shares not really setting the world on fire since being 2015’s largest IPO in London. One would suspect that a couple of years back there was something of a bubble in the payments services area. This is now not the case and the slack has been taken up. So much so that City sources / “people familiar with the matter” are suggesting Worldpay has been approached and advisers appointed. Given that the big guns Mastercard and Visa are said to be sniffing around Nets A/S, we can assume the same degree of status for those targeting Worldpay. One would not rule out the need for the likes of Apple Pay and Paypal – previously suspects for Nets, entering the fray here.
Clearly, Worldpay being a bid target would be a big deal, and if in early stages one would expect a denial, especially from those involved until negotiations are closer to being finalized.
But one can rely on the momentum of the stock market at the moment anyway, the extremely strong charting set up with the Golden Cross buy signal from April – after a weak bulls’ flushout in March.
This points to a target of 380p anyway over the next 1-2 months while above 300p. The rumoured offer price for the company is 450p – 500p, and given the way that there were over 9.5 million shares traded in Worldpay, even the cynics would have to acknowledge there is something going on other than a positive read across from Net A/S’s announcement.
If there is no smoke without fire, we have heavy trading suggesting something is going on, or indeed, has already happened.