MasterCard to Buy DataCashBy: Shirley Spicer, Friday August 20th 2010
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Despite the much cited problems of legal issues, rejections and fear of identity theft, credit cards continue to be the major deposit option for the online casino industry. And even if players use electronic wallets to fund online casino accounts, they use credit cards to load their electronic wallets. Hence online casino industry watchers are interested in the goings on of credit card service providers.
It was announced on August 19 that MasterCard Inc., the world’s second largest payments network, has agreed to buy DataCash Group Plc. DataCash is a United Kingdom based processor of online credit card transactions. MasterCard will pay £333 million, which works out to $517 million, in cash for the acquisition. This offer is based on 360 pence a share, which is about 52% more than DataCash’s average closing price of 237 pence for the past month. MasterCard will conduct this deal 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.
Ajay Banga, the Chief Executive Officer of MasterCard, elaborated on what advantages would be secured by his company through this deal. He said, "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." He also pointed out that The Third Man fraud screening business, developed by DataCash for the e-gaming industry, would be a great help to its existing online payments business in Asia. Banga was speaking in a conference call to analysts, investors and reporters. Giving a broader perspective on the e-commerce industry, Banga said that the industry was in an early stage of development, particularly outside the United States. The e- commerce space will be full of opportunities for the next decade. Banga added, "The story of e-commerce is only being written now."
DataCash was founded in 1996. It provides software to link online retailers with their payment systems. The offer was considered fair and reasonable by the directors of DataCash, who will recommend it to shareholders. DataCash Chairman Ashley Head said, "The proposed acquisition represents a significant opportunity for DataCash to drive increased adoption of our platforms and programs internationally." Incidentally, Head owns 43.4% of DataCash, which means that he stands to receive £144.5 million from the deal.
Last month MasterCard’s larger competitor, Visa Inc., had completed a $2 billion acquisition of CyberSource Corp. CyberSource helps merchants accept online payments and provides security solutions and is a competitor of DataCash. Banga of MasterCard however ruled out that their acquisition was any sort of reaction to the Visa purchase, but was an independent decision taken without any external compulsions.
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