Durango’s Mercury Payment Systems Inc. on Monday accepted a $1.65 billion purchase offer from Vantiv Inc., a payment-processing company based in Cincinnati.
Mercury announced it would suspend its initial public offering that it had been advancing toward and would withdraw its registration statement filed with the Securities and Exchange Commission.
Mercury’s management team, including CEO Matt Taylor, and locations in Colorado will remain in place, a news release said. The transaction is expected to close by midyear.
The purchase came as a surprise. Mercury’s move toward an IPO – the company filed a confidential draft registration with the SEC in December – brought out a buyer in Vantiv.
“We were to the late stages of preparing for the IPO, and Vantiv approached us with a very attractive offer,” Taylor said in an interview. “It just became an obvious thing to try and merge the companies, and I’m glad we were able to do that.”
He said Mercury will remain in Durango. In fact, the company will move into its new south Durango headquarters, Mercury Village, beginning Friday.
Mercury is one of Durango’s largest employers, with about 400 employees in Durango and more than 200 in Denver. Overall, Mercury had 646 full-time employees at end of 2013, according to the registration statement.
The deal combines Vantiv, the third-largest merchant payment services, with Mercury, the 11th-largest. Vantiv is publicly traded on the New York Stock Exchange under the symbol VNTV.
Both companies specialize in high-tech payment processing of debit-, credit-and gift-card transactions.
Vantiv was spun off from Fifth Third Processing Solutions in June 2011 and went public in March 2012. The company had a net revenue of $2.1 billion in 2013.
Vantiv CEO Charles Drucker, in a conference call with investors, praised Mercury’s good relationships with merchants and dealers. He said Mercury could further penetrate the payment-processing market.
“We see a lot of opportunity for growth,” he said.
The transaction was greeted cautiously by Durango’s close-knit business community. While business leaders said the deal makes sense, they worried what it could mean for Durango.
“The real question is the synergies that they want to achieve, will that mean that they move big pieces of the company out of Durango or not, and that I just can’t even guess,” said Gary Masner, a retired Silicon Valley venture capital executive who co-founded a business accelerator in Durango. “It obviously increases the risks of pieces of the company, major functions or things like that, moving.”
Mergers often result in layoffs when some positions become redundant. Taylor said it’s too early to know if any local jobs will be affected.
“It’s really preliminary to talk about how the merger’s impact will evolve over time,” he said.
Roger Zalneraitis, executive director of the La Plata Economic Development Alliance, said Vantiv had not moved two companies it previously acquired.
“Vantiv doesn’t strike me as the type of company that acquires and consumes a company,” he said. “I don’t see us finding out in July that Mercury’s exiting our market or something terrible like that. There very well might be an upside.”
The deal marks a remarkable milestone for Mercury, founded by brothers Jeff and Marc Katz in 2001 in Brewster, New York.
Mercury quickly grew into one of Durango’s largest employers after moving here in 2002, and the company was often lauded for bringing Silicon Valley-style innovation to rural Southwest Colorado.
Taylor, a former restaurant manager, became Mercury’s eighth employee when he was hired in October 2003. He served as chief operating officer under cofounder Marc Katz before being elevated to CEO in May 2009.
Mercury in April 2010 sold a majority stake in the company to Silver Lake, a California venture capital firm. Silver Lake’s involvement sparked speculation Mercury would prepare to go public.
In 2013, Mercury had $237 million in revenue, a 17 percent jump from a year earlier. The company processed nearly 1.2 billion credit, debit and other transactions in 2013.