Please ensure Javascript is enabled for purposes of website accessibility

Why First Data Stock Popped 45.8% in January

By Steve Symington – Updated Apr 15, 2019 at 4:25PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The financial-services leader is being acquired.

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 (FISV -2.09%) 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

IMAGE SOURCE: GETTY IMAGES.

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."

Check out the latest Fiserv earnings call transcript.

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.

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.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Fiserv, Inc. Stock Quote
Fiserv, Inc.
FISV
$95.90 (-2.09%) $-2.05

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
329%
 
S&P 500 Returns
106%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 09/27/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.