Global Payments agrees $24.25 billion Worldpay deal as industry heavyweights shift focus

By Milana Vinn, David French and Akash Sriram

 

(Reuters) - Global Payments has agreed to buy rival Worldpay from FIS and private equity firm GTCR for $24.25 billion in a three-way deal, sharpening its focus on merchant services in its race for big-business clients in a crowded payments market.

 

As part of the deal announced on Thursday, Global Payments will sell its issuer solutions unit, which offers card processing and account services, to FIS for $13.5 billion.

 

The agreements will be transformative for two of the world’s largest processors of digital payments, with Global becoming a pureplay payments processor to businesses and FIS solidifying its offering around services to financial institutions.

 

It will also give a substantial return to GTCR on its investment in Worldpay, less than two years since the private equity firm bought a majority stake.

 

"I think, from my vantage point, this creates a merchants solutions powerhouse," Global Payments Chief Executive Cameron Bready said in an interview. The pro forma company would be a market leader globally due to the capabilities of its combined products and the scale of its offering to customers, he added.

 

The deal will allow Global Payments to combine Worldpay’s strength in online and enterprise transactions with its expertise in serving small and mid-sized companies.

 

The combined company will serve over six million customers and process about 94 billion transactions across more than 175 countries, generating about $12.5 billion in adjusted net revenue and $6.5 billion in adjusted core earnings, per a statement.

 

The Atlanta-based company has been undertaking a review of its business in recent months, shedding smaller pieces to streamline its offering and boost returns. The Worldpay deal is its most comprehensive action since acquiring TSYS for more than $21 billion in 2019.

 

"After several years of uninspiring merchant organic revenue growth and what we consider a lack of strategic cohesiveness, this transaction is a bold step for Global management — and long overdue," William Blair analyst Andrew Jeffrey said in a note.

 

The deal talks kicked off several months ago when the CEOs of Global Payments, FIS, and Worldpay - Bready, Stephanie Ferris and Charles Drucker - started discussing how a potential transaction might be structured to benefit each other, according to people familiar with the matter.

 

Under the agreement, Global Payments will sell FIS its issuer solutions business for a cash payment and FIS’s 45% stake in Worldpay. Global will use the issuer solutions proceeds, as well as other cash and stock to acquire GTCR’s Worldpay holding.

 

The private equity firm will own 15% of Global Payments, following the close of the transactions, expected in the first quarter of 2026.

 

FIS CLEANS UP

The agreements also dramatically reshape FIS, both in shifting its focus to doing business with financial institutions but also shedding its remaining stake in Worldpay, which it acquired for $43 billion in 2019.

 

"We’re turning a non cash flow generating minority interest into a strategic asset with an attractive growth profile," said FIS Chief Executive Ferris in an interview.

 

Ferris said the ability to combine its existing debit processing business with Global’s issuer solutions unit, which has a strong credit processing offering, would create substantial cross-selling opportunities.

 

FIS forecasts more than $500 million of additional adjusted free cash flow generated in the first year after closing, per its statement.

 

"For FIS, there are benefits beyond the asset synergies as it ultimately simplifies the financial profile/perception story for investors," said analysts at TD Cowen in a note.

 

By focusing on a single aspect of payments, both companies are aiming to become specialists in one business line, but also address investor concerns about their competitiveness against newer entrants promising better and cheaper payments services.

 

Both have struggled in recent years to deliver share price growth: FIS shares have lost more than half their value since buying Worldpay in 2019.

 

While the shares of both companies have trailed the S&P 500 index, Global Payments’ stock has significantly underperformed rival FIS over the past year.

 

Shares of Global Payments, which has a market value of about $17 billion, closed down 17.4% on Thursday, while FIS, also known as Fidelity National Information Services, jumped 8.7%.

 

The announcement for the deal was complicated by the wider market volatility, which delayed the signing of an agreement by a few days, according to sources.

 

Goldman Sachs advised FIS, Wells Fargo advised Worldpay, and Morgan Stanley served as financial advisor to GTCR. 

 

(Additional reporting by Niket Nishant in Bengaluru; Editing by Anirban Sen, Ed Osmond and Rosalba O’Brien)