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Mastercard to acquire Nets' corporate service businesses for €2.85B

Mastercard Inc. is buying the majority of the corporate service businesses of European payments technology company Nets A/S for €2.85 billion ($3.19 billion).

The payments processor giant will acquire Nets' clearing and instant payment services and e-billing solutions. Mastercard said in a news release that the deal would strengthen its account-to-account capabilities and enhance its real-time payment assets together with an expansion in the Nordic region.

In a separate news release, Nets said its e-identification and digitization services are not part of the deal.

Nets' corporate services business operates managed services and software license models in several European markets. The company also has a bill payment service in Norway and Denmark, according to a news release from Mastercard.

The Danish payments provider is owned by an entity affiliated with private equity firm Hellman & Friedman LLC.

The deal is expected to close in the first half of 2020. Mastercard expects the deal to be dilutive for up to 24 months after closing, primarily related to purchase accounting and integration-related costs.

The acquisition comes on the heels of the Federal Reserve's plan to launch its own real-time payments network, which it hopes to make available by 2023 or 2024. The publicly run system will compete with The Clearing House, a private company owned by many of the country's largest banks. Opponents of the plan have argued that the Fed's plan will eliminate private sector innovation in the market. The Independent Community Bankers of America have backed the plan, saying it would prevent a monopoly of real-time payments systems.

Mastercard and Visa Inc. had previously bid for Earthport PLC, a U.K.-based company that uses blockchain in its cross-border payments services in the U.K., Europe and North American markets. Visa eventually acquired control of the company for £247 million. Mastercard dropped out from bidding on Earthport to focus on acquiring Trans-Fast Remittance LLC, an account-to-account money transfer network company.

Visa was reportedly interested in acquiring certain parts of Nets' operations, Quartz reported in July, citing people familiar with the matter. The operations related to bank-to-bank payments and automatic billing, which Visa viewed as the European company's profitable segments.

Mastercard's shares were up 1.86% in the premarket trading hours.