Advent/Bain Near Deal for RBS WorldPay

LONDON (Reuters) – Royal Bank of Scotland (RBS.L) is in exclusive talks with Advent International and Bain Capital over the sale of its payment-processing unit WorldPay, two people familiar with the matter said on Friday.

The private equity duo have about a week’s exclusivity to finalise a deal for the business, which handles about half of all face-to-face debit and credit card transactions in Britain, one of the people said.

RBS was due to presents its first-half results on Aug. 6.

The duo have been vying with rival buyout houses TPG [TPG.UL] and Clayton, Dubilier & Rice to buy the business, which industry sources have said could fetch about 2.5 billion pounds ($3.8 billion). The auction initially drew dozens of suitors.

A sale at 2.5 billion pounds would make it Europe’s biggest buyout of 2010 by far, easily outranking the 1.2 billion euro ($1.5 billion) sale of Belgian diaper-maker Ontex which Candover sold to TPG and the private equity arm of Goldman Sachs. [ID:nLDE66E11L]

RBS is being forced to sell its Global Merchant Services (GMS) unit, which includes WorldPay, by European Union regulators as a consequence of taking state aid.

RBS is also close to a sale of 318 British bank branches to Spanish group Banco Santander (SAN.MC), the euro zone’s biggest lender. A month ago it confirmed receiving the bid from Santander, which sources familiar with the matter said could total up to 1.8 billion pounds. [ID:nLDE65H0D9]

CINCINATTI

Advent is building a portfolio of payments businesses, having paid $561 million to Fifth Third Bancorp (FITB.O) last year for a majority stake in the Cincinnati lender’s payment processor.

Under EU rules RBS can retain a stake in its Worldpay unit of up to 20 percent. Allowing RBS to retain a stake would cut the outlay for a buyer and could help the unit keep key licenses and ensure the presence of a banking partner.

UBS is advising RBS on the sale. Credit Suisse is advising Advent and Bain.

RBS declined to comment. The private equity firms either declined to comment or had no comment to make. (Reporting by Quentin Webb; Editing by Dan Lalor) ($1 = 0.6544 pounds = 0.7766 euros)