What happened

Shares of First Data (NYSE:FDC) were up 19.8% as of 11:40 a.m. EST Wednesday after the retail commerce and payment solutions company agreed to be acquired by Fiserv (NASDAQ:FISV) in an all-stock deal valued at $22 billion.

More specifically, First Data investors will receive 0.303 shares of Fiserv for every First Data share they own. That equates to roughly $22.74 per share (based on Fiserv's closing price yesterday), or a roughly 29.6% premium for First Data shareholders from Tuesday's close. Fiserv stock, for its part, is down around 5% on the news as of this writing.

Chess board with dark pieces on the left and light pieces on the right, and one half and half in the middle.

IMAGE SOURCE: GETTY IMAGES.

So what

To be sure, Fiserv and First Data already enjoy largely complementary product portfolios. But the companies also say they'll invest $500 million over the next five years toward building "integrated, complementary technology capabilities and solutions to enhance client value and increase market differentiation." What's more, they expect the combined company to generate $500 million of incremental revenue synergies over a five-year period as they focus on delivering new solutions.

"I have long admired what Fiserv has achieved over the years, and I look forward to working with the talented associates of both companies as we set a higher standard of innovation and services in the industry," stated First Data chairman and CEO Frank Bisignano. "Our goal at First Data has always been to provide our clients with the most comprehensive suite of innovative, highly differentiated solutions and services, and I am excited by the significant value that the combination with Fiserv creates for all stakeholders."

Now what

As it stands, the deal has already been unanimously approved by both companies' boards of directors. So assuming it also receives the approvals of both shareholders and regulators in the coming months -- the former of which appears all but certain considering First Data's majority shareholder, New Omaha Holdings, has already entered into a voting agreement in support of the merger -- it should close in the second half of 2019. Until then, First Data's stock price will remain tied to the price of Fiserv.

Check out the latest First Data and Fiserv earnings call transcripts.