Global Payments has made headlines with its recent divestiture of a medical software firm, completing a deal valued at $1.13 billion.
This transaction is part of a larger strategic maneuver by Global Payments, which seeks to streamline its focus on merchant solutions and enhance its position in the competitive financial technology (fintech) landscape.
The payments sector has witnessed a flurry of mergers and divestitures as companies attempt to grow and fend off emerging competitors in the online payments space.
“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,” stated Global CEO Cameron Bready in a news release.
Bready emphasized that the acquisition of Worldpay and the divestiture of Issuer Solutions further clarify Global Payments’ strategic focus, positioning it as a pure-play merchant solutions business.
He added that the adjustments will provide significantly expanded capabilities, extensive scale, greater market access, and an enhanced financial profile.
The total purchase price for the acquisition of Worldpay stands at nearly $24.3 billion when factoring in expected tax benefits.
Executives anticipate that the transactions will conclude in the first half of the following year.
The merger of Global Payments and Worldpay is expected to yield a simpler organizational structure, with the combined entity projected to serve over 6 million customers.
This includes approximately 94 billion payment transactions annually, covering nearly $4 trillion in payment volume across more than 175 countries.
GTCR, a private equity firm, is expected to obtain 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,” commented Roger Tutterow, an economics professor at Kennesaw State University.
He further noted, “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 Payments has actively engaged in the fintech merger and acquisition landscape, famously merging with TSYS in 2019 in a $21.5 billion all-stock deal.
This recent divestiture essentially unwinds a significant portion of that merger.
During a conference call with analysts, Global indicated that it anticipates around $600 million in cost savings post-transaction.
However, a spokesperson for Global did not immediately respond to inquiries from The Atlanta Journal-Constitution regarding details about the divestment or any potential workforce impacts, particularly in Georgia.
As it stands, TSYS employs about 2,600 people in the Columbus area, according to the Greater Columbus Georgia Chamber of Commerce.
FIS, headquartered in Jacksonville, Florida, will be acquiring Global’s Issuer Solutions business.
CEO Stephanie Ferris referred to this acquisition as a strategic and accretive transaction.
She expressed confidence that it will expand FIS’ product suite and deepen its relationships with both financial institutions and corporate clients.
Ferris mentioned that Issuer Solutions’ globally scaled credit processing capabilities would complement FIS’ established debit processing operations, strengthening their overall banking and capital markets offerings.
On Wall Street, trading showed mixed results, yet investors appeared skeptical about the deal.
As of mid-afternoon trading, Global shares dropped approximately 15%, while FIS shares rose over 9%.
This dynamic reflects the complexities and myriad responses that accompany major corporate transactions within the fintech industry.
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