Why First Data Stock Popped 45.8% in January

What happened

Shares of First Data (NYSE: FDC) popped 45.8% in January, according to data from S&P Global Market Intelligence , after the company agreed to merge with Fiserv (NASDAQ: FISV) in an all-stock transaction valued at $22 billion.

After drifting higher for the first two weeks of last month along with the broader market, First Data soared nearly 20% on Jan. 16 alone when it announced the deal.

Woman drawing larger fish eating a smaller fish


So what

Fiserv will technically acquire First Data, going by the terms of the agreement, giving investors 0.303 Fiserv shares for every FDC share they own in a tax-free transaction. That represented a value of $22.74 per share based on the Fiserv’s closing price on Jan. 15, marking a healthy 29% premium to FDC’s five-day volume-weighted average price.

The two companies collectively pitched the combination as “highly complementary,” and Fiserv CEO Jeffery Yabuki argued they will be capable of positively transforming “the manner in which people and institutions move money and information.”

Now what

Fiserv and First Data anticipate revenue synergies of at least $500 million and run-rate cost synergy savings of at least $900 million in the first five years following the merger’s close. Assuming all goes as planned as they work to secure the necessary regulatory and shareholder approvals, that close is currently expected to happen sometime in the second half of 2019. In the meantime, given the all-stock nature of the deal, First Data’s share price will remain directly tethered to the price swings of Fiserv.

10 stocks we like better than Fiserv

When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor , has quadrupled the market.*

David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now… and Fiserv wasn’t one of them! That’s right — they think these 10 stocks are even better buys.

See the 10 stocks

*Stock Advisor returns as of January 31, 2019

Steve Symington has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Zeen is a next generation WordPress theme. It’s powerful, beautifully designed and comes with everything you need to engage your visitors and increase conversions.

Wealth Empire Newsletter
Register now for free updates and alerts

Subscribe By

Note: I have the ability to revoke this permission at any time and ask for the removal of my personal data collected by contacting us or simply clicking Unsubscribe.