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Visa sweetens offer for payment company Earthport in its battle with Mastercard

Key Points
  • Visa on Friday sweetened its offer for payment company Earthport to about $319.84 million
  • The offer tops rival Mastercard's earlier bid and sets up a showdown for the assets.
  • Earthport shares have risen more than five-fold since Visa first offered to buy the company.
Norm Betts | Bloomberg | Getty Images

Visa on Friday sweetened its offer for payment company Earthport to about 247 million pounds ($319.84 million), pushing past rival Mastercard's earlier bid and setting up a showdown for the assets.

 unit of Visa offered 37 pence in cash for each Earthport share, a 23 percent premium to its initial bid and 12 percent higher than Mastercard's offer last month.

Earthport shares have risen more than five-fold to 38.80 pence since Visa first offered to buy the company.

Earthport, which had backed the Mastercard bid, said it was now recommending that shareholders accept the increased Visa offer.

Mastercard said it was considering its options and urged Earthport shareholders to take no action in response to Visa's announcement on Friday.

Both Visa and Mastercard have cited the same reason for their interest in Earthport — the deal would allow it to expand its cross-border network service.

Payment processing has become one of the hottest areas for deal making in the last two years, driven by technological changes in the way consumers pay for products.

Earthport, whose shares fell 28 percent last year until the first bid, offers a lower-cost option to traditional payments systems by allowing banks and money transfer firms to have a single relationship instead of multiple ties with various payments channels around the world.

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Key Points
  • Three major credit card networks — Visa, Mastercard and American Express — were upgraded by Jefferies and Atlantic Equities on Tuesday.
  • Jefferies initiated coverage and a buy rating on both Mastercard and Visa.
  • Atlantic Equities is now overweight on American Express, citing a “highly compelling” valuation.