Earthport investors argue they can do better than Visa's offer

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Earthport Plc investors, who saw their shares drop 70 percent in three years as the payments firm lost customers and management, now have an offer to cash out with a 300 percent premium. But not all of them are happy about it.

A Visa Inc. subsidiary said on Dec. 27 that it had offered 30 pence a share, or 198 million pounds ($252 million), for London-based Earthport, about four times the stock’s previous closing price. That was enough for management to recommend the offer, which needs support from at least 75 percent of shareholders to win approval.

Oppenheimer Funds Inc., the company’s largest shareholder with 16.6 percent of shares, has already signed off on the deal. Still, investors holding a collective stake of about 7.8 percent want to see other offers, according to shareholders interviewed by Bloomberg, some of whom asked not to be identified because they aren’t authorized to speak to the press.

Glenn Krevlin, a portfolio manager at Glenhill Capital Advisors who holds a 1.29 percent stake, said he’s dissatisfied with how the sale process was handled and might vote against the deal. Earthport, which serves customers including Bank of America Corp. and Japan Post Bank Co., should have hired a banker and run an auction to fetch a higher valuation, he said.

“It seems there should have been a wider process,” Krevlin said in a phone interview. “Visa has validated the business model and strategic value. The company is at the vortex of what all transaction providers are looking for, international and payments.”

A representative for Earthport said the “all-cash offer from Visa represents a very attractive and immediate return for our shareholders,” and declined to comment further. Visa declined to comment.

Networks that process payments around the world every day are one of the hottest areas in fintech. Last year, Dutch payment processor Adyen NV’s shares more than doubled in their trading debut.

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