Global Payments Enter an All-stock Deal with TSYS in a $21.5 Billion Merger
The FinTech merger and acquisition hype went on at the start of 2019’s second quarter when Global Payments Inc. went public with a $21.5 billion all-stock transaction to merge with Total System Services Inc.
It was the third M&A deal in the payment sector to trend in media sources this year as the industry paces the shift towards a two-party platform capable of serving retailers and financial firms.
The Global Payment—TSYS merger came after the Fiserv Inc. & First Data Corp. deal in January and the merger between Fidelity National Information Services Inc. and Worldpay Inc at the close of Q1.
Global Payments and Total System Services (TSYS) billed their transaction as a “merger of equals” where Global Payments stockholders will control 52 percent of the new combined company and shareholders for TSYS will possess the other 48 percent.
According to Jeff Sloan, The Chief Executive for Global Payments, this deal would speed up the strategy the company has had over the past few years to penetrate the most attractive marketplaces with a global payments platform, a top ecommerce & Omnichannel business, and gain entry to the fastest growing markets.
Sloan also highlighted that the merger is in line with the firm’s recent plans to establish a more software-centric business, an approach that has worked for other fintech firms. He was also positive that the combined entity would double the revenue that Global Payments had been generating on its own.
Though TSYS wasn’t growing at the same rate as Global Payments at that time, Cameron Bready, the Chief Financial Officer for Global payments was confident the merger would not ruin the payment expert’s bottom line to achieve its targets.
Global Payments intends to improve from a high one-digit to a low two-digit figure in per year revenue, and increase its adjusted earnings from 16 to 18 percent.
Global Payments said it expected a more accelerated growth as soon as revenue synergies came into play. The combined company projects not less than $300 million in annual cost synergies and is optimistic the deal will accrue mid-one-digit earnings by 2020.
According to Moshe Katri of Wedbush, the deal is a step towards the right direction given Europe’s Payment Services Directive II laws that will need banking institutions that provide open-banking applications to third-parties in the banking sector.
As the combined company begins running its operations to achieve the above-listed goals and more, market observers are watching closely to confirm whether the merger was a well-thought-out deal or just part of the ongoing M&A frenzy.
Author Bio: Payment industry expert Taylor Cole is a passionate merchant account expert who understands the complicated world of accepting credit and debit cards at your business. His understanding of retail merchant services has helped thousands of business owners save money and time.…