Fintech and payments company Fiserv, through its affiliate 1517452 B.C. Ltd., has reached a definitive agreement to acquire Canada-based earned wage access solution provider Payfare for nearly C$201.5m ($140m).
Payfare primarily serves gig economy workers, with its client list including ride-hailing apps such as Uber Technologies and Lyft.
Fiserv will acquire all issued and outstanding common shares of Payfare for C$4 ($2.8) each in cash.
This marks a premium of around 90% to Payfare’s closing price on 20 December 2024.
Fiserv looks to bolster its embedded finance offerings by integrating Payfare’s card programme management, white-label consumer app, and microservices orchestration layer.
This complements Fiserv existing capabilities in processing, bank ledgers, and integrated value-added services.
The deal has secured the green light from the Payfare board. It is slated for completion in the first half of 2025, contingent on shareholder and court approvals.
Following the transaction’s closure, Fiserv plans to delist Payfare’s shares from the Toronto stock exchange (TSX) and OTCQX and will request that Payfare cease to be a reporting issuer under Canadian securities laws.
The transaction will be executed through a court-approved plan of arrangement under the Business Corporations Act (British Columbia).
Keefe, Bruyette, & Woods was the financial advisor to Payfare, while Blair Franklin Capital Partners advised the Special Committee.
Borden Ladner Gervais and Dentons provided legal advice to Payfare, with Blake, Cassels & Graydon and Foley & Lardner serving as external legal advisors to Fiserv.
Payfare has been in a tight spot after losing its largest client DoorDash, prompting the company to withdraw its earlier released earnings outlook for 2024.
Soon after this development in September this year, Payfare launched a strategic review of its business to enhance value.
Fiserv CEO, president and chairman Frank Bisignano stated: “Together, we can accelerate the delivery of embedded finance solutions for all of our clients, empowering their next chapter of success. We look forward to welcoming the talented Payfare team to Fiserv.”
Payfare CEO and founding partner Marco Margiotta said: “Our Board conducted a thorough strategic review process together with our financial advisors, having evaluated numerous acquisition, commercial partnership, and other opportunities, and concluded that the Transaction is in the best interests of the Company, its various stakeholders and its shareholders with certainty of value with an all-cash offer.”
