Shares in Worldpay dipped after Vantiv beat JP Morgan to the chase in an official takeover bid of £7.7bn for the FTSE 100 payments firm.
The two firms were revealed to be mulling an offer on Tuesday, sending stock nearly 30 per cent higher, closing at 408 pence per share and adding more than £1bn to its market cap.
JP Morgan has said that it does not intend to make a counter offer.
Worldpay's share price had shot up another five per cent in trading on Wednesday morning following reports that Vantiv was close to agreeing a deal.
But it closed at 372 pence per share, eight per cent down, after Vantiv's official offer of 385 pence per share was made and a bidding war ruled out.
The offer is a 19 per cent premium on Worldpay's closing share price on Monday before a potential bid was revealed.
The boards of both firms said they see "compelling strategic, commercial and financial rationale for combining Worldpay and Vantiv’s complementary businesses" and have "identified substantial opportunities for cost synergies, which support significant potential shareholder value creation".
Shareholders would own a 41 per cent stake in the combined Vantiv Worldpay business listed on the New York Stock Exchange if the proposed deal went through.
City stalwart and chairman Sir Mike Rake would continue in his position and the board would be made up of four directors from Worldpay and seven from Vantiv.
"Worldpay shares were dumped after its board agreed a merger with Vantiv. JP Morgan pulling-out meant shares had to price-out any chance of a bidding war," said LCG analyst Jasper Lawler.
"The concept of the deal seems straightforward and logical - combine the geographic strength of the two companies in payment processing. The strategy geographic expansion explains plans for a joint chief executive and joint-headquarters at the new company. From a British-perspective, it’s a shame to see another ground-breaking UK tech company selling out to overseas competition, perhaps before reaching full potential on its own."
Vantiv became the biggest acquirer (the go-between processing transactions between retailers and card scheme, such as Visa or American Express) in the US earlier this year in terms of transaction volumes. Annual rankings by Nilson Report showed it overtook rival First Data.
JP Morgan's Chase Paymentech was third, followed by Bank of America and with Worldpay sixth.
Buying up Worldpay would give either firms a bigger share of the UK and European market. Worldpay is the biggest merchant acquirer in both.