First Data to Acquire CardConnect

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Shares of CardConnect Corp. (NASDAQ: CCN) shot up on Tuesday after it was announced that First Data Corp. (NYSE: FDC) would be acquiring the company. First Data will pay $15 per share in cash for all outstanding shares of CardConnect. The parties expect the transaction to close in the third quarter of 2017.

Under the terms of the agreement, a subsidiary of First Data will commence a tender offer to acquire all the outstanding CardConnect common stock for a purchase price of $15 per share in cash, followed by a merger in which each share of CardConnect common stock not tendered will be converted into the right to receive $15 per share in cash.

The transaction value is roughly $750 million, including repayment of CardConnect’s outstanding debt and the redemption of CardConnect’s preferred stock. First Data intends to fund the transaction with a combination of cash on hand and funds available under existing credit facilities.

CardConnect is a payment processing and technology solutions company, and it is one of First Data’s largest distribution partners. The firm processes about $26 billion of volume annually from about 67,000 merchant customers that are served by CardConnect’s large base of distribution partners.

Frank Bisignano, First Data’s board chair and chief executive, commented:

This transaction is consistent with our strategy of integrating and scaling innovative technologies across our distribution footprint to better serve our partners and customers. CardConnect is a long-standing First Data distribution partner and we are excited to incorporate their state-of-the-art solutions across some of our most important strategic initiatives such as partner-centric distribution, integrated payments, and enterprise payments solutions.

Shares of First Data were up 1% at $16.81 on Tuesday, with a consensus analyst price target of $18.66 and a 52-week trading range of $9.90 to $17.01.

CardConnect traded up 10%, at $15.05 in a 52-week range of $8.70 to $15.15. The consensus price target is $17.00.