King of Prussia, Pa.-based CardConnect, one of Philly’s ubiquitous fintech firms, will be acquired by Atlanta-based First Data in a deal valued at $750 million.
As part of the deal, CardConnect CEO Jeff Shanahan along with the management team and staff of 145 will stay put in the firm’s MontCo stronghold. Half a dozen satellite offices in places like Chicago, Cleveland and Denver will also join First Data.
“We believe our growth trajectory improves with First Data’s breadth of products and its powerful distribution network,” Shanahan said in a statement published Monday.
First Data to Acquire @CardConnect.
Read more: https://t.co/rrGuFYSkXp pic.twitter.com/M8U3PAlBYr
— First Data (@FirstData) May 30, 2017
First Data, which handles $2.2 trillion transactions each year versus CardConnect’s $26 billion, will acquire all outstanding shares of CardConnect common stock at $15 per share, a premium of almost 10 percent from its closing price on Friday.
Shanahan said Tuesday during an investors’ conference call that the team was excited to “join the First Data family,” and that the move will let the company scale to a broader client base.
Both companies have been long-time distribution partners for years, with CardConnect acting as a distribution partner to some of First Data’s payment solutions.
“The strategic rationale for this move is using tech to help partners growth heir business, improve retention rates and expanding the reach of our enterprise business,” First Data Chairman and CEO Frank Bisignano said on the call.
The exec also confirmed the CardConnect would stay alive. “The brand will remain and I’ll personally oversee the integration process with Jeff,” Bisignano said. “The company, as it exists today, will continue to exist.”
CardConnect, founded in 2006 by Shanahan’s brother Brian, has been through quite a ride. In 2012, the firm moved from Cleveland to King of Prussia along with 25 staffers. In March 2016, the firm was acquired by FinTech Acquisition Corp. in a $350 million in a bid to go public. That summer, CardConnect’s stock went live on the Nasdaq trading floor, with a gleeful management team ringing the Nasdaq bell later that year.
Though some analysts expressed concern over the acquisition price, both Bisignano and Shanahan said that the move represented a “unique opportunity” to merge the offerings of both businesses. “Think of this as an 18-24-month accelerator for First Data,” said CFO Himanshu Patel, in a reference to the fact that the true value of the acquisition would likely be seen further down the line.
Apparently, Shanahan was right: fintech was way more than a buzzword.
