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Fiserv makes monster $22B acquisition of First Data

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Fiserv will acquire First Data in an all-stock deal with a value of about $22 billion that will combine two of the financial services industry's largest technology and processing companies.

Fiserv shareholders will own almost 58% of the combined company, with First Data's shareholders holding the rest. The acquisition is expected to close in the second half of 2019.

The combined company will be called Fiserv; and current Fiserv President and CEO Jeffery Yabuki will be CEO and chairman. Current First Data Chairman and CEO Frank Bisignano will be president and chief operating officer.

Both companies have been adding new technology to adjust to the expansion of digital financial services that have threatened traditional business models for companies that service financial transactions.

Fiserv partnered with the fintech startup GoldBean to provide digital advisory services in 2017. One of the stated objectives was to integrate the robo advisor’s education and advice tools into its Unified Wealth Platform, to entice the firm’s DIY investors to use human wealth managers on its platform.

Cheryl Nash, president of investment services at Fiserv, said at the time she believes the hybrid advice model that combines technology tools with humans is where the industry is heading as opposed to pure-play digital platforms.

First Data has enhanced its technology stack with recent acquisitions such as its $750 million CardConnect deal to build its e-commerce, CRM and security. It has also enhanced its distribution via collaborations such as its recent deal with Alipay.

While Fiserv controls more than a third of the U.S. core banking market, it also finds itself challenged to deal with the encroachment of fintech companies.

The Fiserv/First Data deal's impact starts with massive scale that will be a formidable competitor to both bank technology vendors and merchant acquirers. Fiserv has more than 12,000 financial services clients in 80 countries, and First Data serves more than 6 million merchant locations.

Fiserv and First Data will combine merchant and cash management services, supporting account enrollment to be integrated with digital banking; and combine First Data's corporate payment services with Fiserv's billing technology.

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