UPDATE: DataCash Agrees To GBP333 Million MasterCard Takeover

Credit card giant Mastercard Inc. (MA) Thursday announced a GBP333 million takeover of payment processing company DataCash Group PLC (DATA.LN), as it bids to improve its e-commerce business capabilities in new and existing markets.

Mastercard said the deal, which is expected to close by the end of October, will enable a quicker entry in to more of the European market and new emerging markets, encourage greater use of its card for online purchases in Europe and aid its launch of new e-commerce products.

The credit and debit card payment processing network provider is keen to increase its presence in Europe because many consumers in markets outside the U.S. still prefer to use cash.

Of those consumers who make online payments and money transfers in Europe, a large number choose to complete the transactions using eBay Inc.'s (EBAY) PayPal.

"DataCash has a very established European presence and we see the opportunity to take advantage of European growth and expand in to more markets in Europe," Gary Flood, head of MasterCard's Global Products and Solutions told analysts on a conference call.

He added that DataCash also has "a variety of other capabilities," including the potential to cross-sell its fraud-prevention services.

DataCash's board is backing the deal. The company's shareholders are to receive 360 pence a share under the terms of the offer, a 54% premium to the stock's closing price Wednesday.

The deal is expected to trim 5 U.S. cents from MasterCard's fourth-quarter earnings a share, will break even in 2011 and add to earnings in 2012, although MasterCard didn't say what level of earnings contribution the deal would add that year.

MasterCard hasn't ruled out further acquisitions. Chief Executive Ajay Bango said the company would consider other deals "if something interesting comes along."

However he said in the near-term the company's priority would lie with successfully integrating London, U.K.-based DataCash in to the business.

At 1530 GMT DataCash shares were trading 122 pence, or 52%, higher at 356 pence.

-By Hannah Benjamin, Dow Jones Newswires; 44-20-7842-9298; hannah.benjamin@dowjones.com

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