MasterCard to Acquire DataCash for 333 Million Pounds

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

DataCash, a U.K. processor of Internet credit-card sales, rose 52 percent to 355 pence at 4:35 p.m. in London trading. MasterCard said the recommended offer of 360 pence a share was about 52 percent more than 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 today.

DataCash, founded in 1996, provides software to link online retailers with their payment systems. Purchase, New York-based MasterCard and larger rival Visa Inc. are facing increased competition from electronic-commerce firms such as EBay Inc.’s PayPal. Last month, San Francisco-based Visa completed a $2 billion acquisition of CyberSource Corp., which helps merchants accept online payments and provides security solutions.

The DataCash acquisition shouldn’t be viewed as a reaction to the CyberSource deal, Banga said today in a conference call for analysts, investors and reporters.

‘Fair and Reasonable’

“The e-commerce business is in an early stage of development when you get outside of the U.S., and even in the U.S. it’s in a relatively early stage,” he said. “It’s really not about reacting, it’s the opportunity we see in the e- commerce space for the next decade. The story of e-commerce is only being written now.”

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 U.K. Ltd. unit, which has already received commitments to vote in favor of the transaction from owners of 52 percent of the stock.

“The proposed acquisition represents a significant opportunity for DataCash to drive increased adoption of our platforms and programs internationally,” DataCash Chairman Ashley Head said in the statement. The acquisition “represents an opportunity for investors today to realize the potential benefits of the combination.”

Head owns 43.4 percent of DataCash, giving his stake a value of about 144.5 million pounds under the terms of the deal, according to Bloomberg data.

DataCash officials didn’t respond to messages seeking comment.

MasterCard fell $3.97, or 1.9 percent, to $208.89 at 4:15 p.m. in New York Stock Exchange composite trading.

To contact the reporter on this story: Chris Spillane in London at cspillane3@bloomberg.net.

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