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Global Payments plans to acquire merchant services company Worldpay for $24.25 billion, including $1.55 billion in tax assets, from its two owners, Fidelity National Information Services and private equity firm GTCR.
In a swap of assets, banking technology services company FIS also said Thursday that it expects to buy Global Payments’ issuer business for $13.5 billion, including $12 billion plus $1.5 billion in tax assets.
The multi-pronged deal makes good on previously announced intentions by the two payments players to expand their core businesses as they move out of certain related ancillary areas.
Global Payments has been in a “transition” period in which it was exploring what parts of its business to sell. The Atlanta company was encouraged by analysts to consider selling the issuer business in order to concentrate on its payments processing.
For Jacksonville, Florida-based FIS, buying the issuer services business was a natural way to expand its main banking services segment.
“The acquisition of Issuer Solutions is a strategic and accretive transaction that will expand FIS’ payment product suite and deepen our relationships with financial institutions and corporate clients,” said FIS CEO Stephanie Ferris said in a press release regarding the transaction.
Chicago-based GTCR is cashing out of its majority ownership holding in Worldpay just over a year after completing its acquisition of the stake from FIS, which retained a minority stake.
As part of the agreement, FIS will sell its stake in Worldpay to Global Payments for $6.6 billion in pre-tax value, the FIS release said.
In its acquisition of Global Payments’ issuer business, FIS is blending in an issuer operation that processes some 40 billion transactions annually in 75 countries and has ties to about 170 financial institutions and companies.
As for Global Payments, its release highlighted a new “extensive global reach and scale” by way of the merger, noting the combined company will have six million merchant customers, and process about 94 billion transactions annually for $3.7 trillion in payments volume in 175 countries.
FIS expects to benefit from being able to cross-sell more services to banks, particularly with respect to card payments acceptance, according to an FIS presentation Thursday.
“While revenue synergies are expected to be small initially, we believe the cross-sale opportunities are substantial; FIS’s issuer-processing (Payments One) platform is largely focused on debit, while (Global Payments) has a large presence in credit and adds value-added services,” analysts at the financial firm William Blair said in a note to their clients on Thursday. “The credit capabilities should help drive incremental growth in loyalty products (i.e., Premium Payback) and further cross-selling opportunities with its customers across the banking and capital markets segments.”
