On Wednesday, JP Morgan said that it would acquire close to 75 percent in the payments unit run by German auto maker Volkswagen, although the purchase amount remained undisclosed. The acquisition is expected to be made in by the second quarter of 2022 after it obtains the necessary regulatory approvals. The news did not boost the market value of both the companies. Volkswagen shares fell by 2.4 percent in Germany, amid the overall slump in European markets while JP Morgan fell by 0.4 percent premarket in the U.S.
JP Morgan noted that the deal would help it to enter a new marketplace — the auto market for the first time. The deal will also help to the banking giant to expand its operations and it could also explore other markets using the Volkswagen payments unit, over a period of time.
In 2017, Volkswagen established a payments platform headquartered in Luxembourg. This unit allows customers to buy and lease cars. It also includes allied operations such as paying parking tickets, fuel and electric vehicle charging and more.
The platform, built by the world’s second largest automaker, also offers additional related services such as insurance, in car entertainment and more . The unit is not only an important part of the auto sector but can also expand operations as it has a presence in 32 countries around the world and the market is growing.
JP Morgan is planning to place the Volkswagen unit under its wholesale payments business. After the deal is completed, sometime mid next year, the joint venture might see a change in branding. Although terms were not announced, Volkswagen is expected to retain an estimated 25 percent stake in the joint venture.
JP Morgan has been in a buying spree this year. It has already made the following acquisitions and investments, subject to regulatory approval.