Payment consolidation is alive and kicking with Fidelity National Information Services agreeing to pay $35 billion to acquire Worldpay of the UK.
With the payments industry looking to cut costs and expand their offerings, consolidation is inevitable. Fidelity National Information Services, known as FIS, is the latest evidence of that, announcing a $35 billion deal to acquire Worldpay earlier Monday.
The cash and stock deal values UK-based Worldpay at $43 billion, including the assumption of debt which FIS said it plans to refinance. Under the terms of the deal, Worldpay shareholders get 0.9287 shares and $11.00 in cash for each share of Worldpay. FIS shareholders will own about 53% of the combined company while Worldpay shareholders will have a roughly 47% stake. Once the deal is closed, the combined company will offer a bevy of services for businesses and financial institutions including enterprise banking, payments, capital markets, and eCommerce services. Worldpay processes more than 40 billion transactions each year and supports more than 300 payment types in more than 120 currencies.
In the press release announcing the deal FIS Chairman and Chief Executive Gary Norcross pointed to consolidation as a driving force behind the merger. “Scale matters in our rapidly changing industry,” the executive said, noting that combined the company will have scale, global presence and a broad range of global financial services. FIS said the deal will accelerate revenue with organic revenue growth projected to be between 6% and 9% through 2021. The company also expects to realize $700 million of total EBITDA synergies and pro forma 2018 revenue and adjusted EBITDA of around $12.3 billion and $4.9 billion respectively. The combined company will maintain the FIS name and will be headquartered in Jacksonville, Florida. FIS gets seven seats on the 12 member board while Worldpay gets five. Norcross will continue to be chairman, president, and CEO while Worldpay CEO Charles Drucker will become the executive vice chairman of the board.
The $35 billion merger is by far the largest deal for the payments industry that has faced pressure in recent years to slash costs, build new products and expand their customer bases. With fintech startups stealing market share thanks to lower fees, the traditional payment companies have been forced to respond. In January Fiserv acquired First Data, the payment processor for $22 billion.
Wordplay has been the subject of mergers and acquisitions itself over the years. In 2010, Royal Bank of Scotland sold the unit in an effort to raise capital. In 2017 Worldpay Group was acquired by Vantiv for $10.6 billion. Nine years later Worldpay is valued at $43 billion including debt and RBS is worth GBP 32 billion. In 2017 Worldpay Group was acquired by Vantiv for $10.
