Barclays Bank is nearing an agreement to sell its merchant acquiring business to Brookfield Asset Management from Canada.
In February, Barclays announced its intention to explore either a sale or partnership for the merchant acquiring division, which has faced challenges in remaining competitive against rivals such as Stripe, Adyen, and Dojo.
According to Sky News, discussions are in the advanced stages for a transaction worth £650 million, in which Brookfield would initially acquire 10% of Barclays’ merchant acquiring division. Three years post-deal, Brookfield would obtain an additional 80% stake, with Barclays retaining a 10% share.
Valuation concerns have been a hurdle for Barclays, as potential investors are hesitant to invest significantly after previous write-downs. Last December, Barclays reduced the business’s valuation by £300 million. Additionally, negotiations have been complicated by Global Payments’ acquisition of Takepayments, a partner of Barclays, which could impact revenues, as well as the substantial investments needed to upgrade aging payment systems and products.
Notably, the final agreement would involve Barclays contributing £400 million to the payments division to support its path to sustainable growth, according to sources. Barclays would also need to provide approximately £250 million in regulatory capital to secure approval for the deal.