Global Payments, an Atlanta-based giant in the world of payments processing and technology, said Thursday it is acquiring rival Worldpay in a $22.7 billion deal, and it will sell another part of its business to help pay for the merger.
The deal will build Global’s capabilities in e-commerce and help expand its customer base among merchants worldwide. Worldpay is owned by private equity firm GTCR and the financial technology company FIS.
As part of the complex transaction, Global said it will sell its Issuer Solutions division, the part of the company that makes physical and virtual credit cards for its clients, to FIS for $13.5 billion. Global and FIS also announced a business partnership as part of the deal.
Paying is an easily forgotten act. A simple swipe here, a tap on a smartphone app there. But doing so seamlessly and securely is essential for the global economy, and it is big business for the Peach State, a vital hub in the world of financial technology.
The payments sector has undergone a dizzying spate of mergers and divestitures over the years as companies try to get bigger and fend off upstart rivals in the online payments world.
“Today marks a defining day for Global Payments and a pivotal milestone in our journey to become the worldwide partner of choice for commerce solutions,” Global CEO Cameron Bready said in a news release. “The acquisition of Worldpay and divestiture of Issuer Solutions further sharpen our strategic focus and simplify Global Payments as a pure play merchant solutions business with significantly expanded capabilities, extensive scale, greater market access and an enhanced financial profile.”
With expected tax benefits from the deal, Global said its purchase of Worldpay is worth nearly $24.3 billion. The transactions are expected to be completed in the first half of next year.
The Global-Worldpay tie-up will make the business simpler, Global executives said.
The combined Global and Worldpay business is expected to serve more than 6 million customers, with about 94 billion payment transactions per year covering nearly $4 trillion in payment volume across more than 175 countries.
GTCR will control about 15% of Global’s shares upon closure of the deal.
“That’s part of the game in the payments system, it is all about volume,” said Kennesaw State University economic professor Roger Tutterow. “You make relatively small margins but if you do it on high enough volumes … several trillion dollars in transactions a year will add up to real cash flow.”
Global has been one of the more active players in the financial technology, or fintech, mergers-and-acquisitions game. The company pushed deeper into payment processing and credit card issuance in 2019 when it announced a $21.5 billion all-stock deal to merge with TSYS, a financial technology company based in Columbus.
The divestiture would largely unwind a major part of that 2019 merger.
In a conference call with analysts, Global said it expects the deal with Worldpay will result in some $600 million in cost savings after closing.
A spokesperson for Global did not immediately return a message from The Atlanta Journal-Constitution seeking more information about the divestment and about any potential workforce impacts in Georgia.
TSYS has about 2,600 employees in the Columbus area, according to the Greater Columbus Georgia Chamber of Commerce. FIS is based in Jacksonville, Florida.
Stephanie Ferris, CEO of FIS, called the deal to buy Global’s Issuer Solutions business “a strategic and accretive transaction that will expand FIS’ payment product suite and deepen our relationships with financial institutions and corporate clients.”
“Issuer Solutions’ globally scaled credit processing capabilities are highly complementary to FIS’ established debit processing capabilities, strengthening our broader banking and capital markets offering,” she said in a news release.
Trading overall on Wall Street was mixed Thursday, but investors did not seem to favor the deal. Global shares were trading down about 15% as of about 1:30 p.m.
FIS shares were up more than 9% as of about the same time.
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