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.
