Global Payments has agreed to buy its competitor Worldpay in FIS and the GTCR capital-investment company for 24.25 billion dollars as part of a tripartite agreement, thus strengthening its orientation towards services to traders in its race to conquer large companies in a very competitive payment market.
As part of the agreement announced Thursday, Global Payments will sell its unit of solutions for issuers, which offers card processing and account management services, for $ 13.5 billion.
These agreements will transform two of the largest digital payment processors in the world, Global becoming a payment processor dedicated to businesses and FIS consolidating its service offer to financial institutions.
This will also allow GTCR to carry out a substantial return on investment in Worldpay, less than two years after having acquired majority participation in the investment capital company.
“I think that from my point of view, it creates a giant of solutions for merchants,” said Cameron Bready, Managing Director of Global Payments, during an interview. Pro Forma would be a world leader thanks to the capacities of its combined products and the extent of its offer to customers, he added.
This operation will allow Global Payments to combine the Force of Worldpay in online and business transactions with its expertise in small and medium -sized enterprises services.
The company from the merger will serve more than six million customers and will deal with around 94 billion transactions in more than 175 countries, generating net adjusted turnover of approximately $ 12.5 billion and an adjusted profit of $ 6.5 billion, according to a statement.
The company based in Atlanta has undertaken a revision of its activities in recent months, separating from certain divisions in order to rationalize its offer and increase its yields. The agreement with Worldpay is its most important measure since the acquisition of Tsys for more than $ 21 billion in 2019.
“After several years of mediocre organic growth in the turnover of traders and what we consider as a lack of strategic cohesion, this transaction is a bold measure for the management of Global, which should have been taken for a long time,” said Andrew Jeffrey, analyst at William Blair, in a note.
Negotiations started several months ago, when the CEOs of Global Payments, FIS and Worldpay, Mr. BREADY, Ms. Stephanie Ferris and Mr. Charles Drucker, began to discuss how a potential transaction could be structured to benefit all parties, according to people close to the file.
Under the terms of the agreement, Global Payments will sell its activity of solutions for issuers against cash payment and the participation of 45 % FIS in Worldpay. Global will use the product of the sale of the activity of solutions for issuers, as well as other liquidity and shares, to acquire the participation of GTCR in Worldpay.
The capital-investment company will hold 15 % of Global Payments after the transaction, which should be finalized in the first quarter of 2026.
-Fis houses
The agreements also redefined FIS in depth, which will now focus on its activities with financial institutions and will separate from its remaining participation in Worldpay, acquired for $ 43 billion in 2019.
“We are transforming a minority participation which does not generate cash flow into a strategic asset with an attractive growth profile,” said Ferris, FIS Director of FIS during an interview.
Mr. Ferris added that the possibility of combining his existing debit cards processing activity with the unit of solutions for global issuers, which offers a solid offer in terms of credit cards processing, would create major cross -sales opportunities.
FIS plans to generate more than $ 500 million in cash flow available additional in the first year following the fence, according to its press release.
“For FIS, the advantages go beyond asset synergies, as this ultimately simplifies the financial profile and the perception of investors,” said TD Cowen analysts in a note.
By focusing on a single aspect of payments, the two companies aim to become specialists in an activity field, but also to respond to investors’ concerns concerning their competitiveness in the face of new entrants promising better and cheaper payment services.
Both have experienced difficulties in recent years to advance the course of their action: FIS action has lost more than half of its value since the buyout of Worldpay in 2019.
If the actions of the two companies have underperformed the S&P 500 index, those of Global Payments clearly underperformed those of its rival Fis during the past year.
Global Payments’ shares, whose market value amounts to around $ 17 billion, closed down 17.4 % on Thursday, while FIS, also known as the National Information Services Fidelity, jumped 8.7 %.
The announcement of the agreement was complicated by the general volatility of the market, which delayed the signing of an agreement of a few days, according to some sources.
Goldman Sachs advised FIS, Wells Fargo advised Worldpay and Morgan Stanley acted as a GTCR financial advisor.
