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US Fintech FIS Will Acquire Worldpay In A $35Bn Deal


03/18/2019


US Fintech FIS Will Acquire Worldpay In A $35Bn Deal
The significant growth in the payments industry was reflected in the announcement of the largest deal; in the segment were in payment processor Worldpay would now be bought over by US fintech group Fidelity National Information Services Inc (FIS) for about $35 billion.
 
There has been a series of high profile restructuring in the financial software and payments technology industry in recent time as companies seek to add strength to cope up with increasing competition in the sector with the advent of startups and new ventures that threaten to disrupt the industry and completely alter the methods in which payments to merchants are made now and in the near future.
 
The last large restructuring deal in the industry happened in January this year with payment processor First Data Corp being bought by US-based Fiserv Inc in a deal worth $22 billion.  There are plans to getting listed in Europe by startups such as Italy's Nexi and take advantage of the boom in the sector that is being driven by increasing online sale.
 
Worldpay was valued at about $43 billion, when debt is included, by the FIS offer of purchase of the former according to the announcement by the companies on Monday. in 2017, Worldpay was purchased by US credit card processing company Vantiv in a $10.63 billion deal.
 
Following the news, there was a 9.4 per cent rise in the shares of the Worldpay listed in London in early trading on Monday.
 
"Scale matters in our rapidly changing industry," FIS Chief Executive Officer Gary Norcross said in a statement.
 
0.9287 FIS shares and $11 in cash for each share held would be awarded to Worldpay shareholders. That would value Worldpay at $112.12 per share – which is a 14 per cent premium compared to the price of the stocks at teh end of trading on Friday, showed calculations by Reuters.
 
The companies said that the merged entity will have revenue of about $12 billion.
 
After the closure of the deal, about 53 percent of the new entity would be owned by FIS shareholders while the rest by the Worldpay shareholders.
 
Worldpay is in the business of payment processing services for the last more than 40 years and had been functioning as a business unit of Fifth Third Bancorp until June 2009 after which it got separated as a stand-alone company. The company was created as a spin off from RBS to private equity firms Bain Capital and Advent International in 2010.
 
“Scale matters in our rapidly changing industry,” said FIS Chief Executive Officer Gary Norcross.
 
“This was an opportunistic move by FIS and was primarily triggered by the need to stay ahead of competitors,” reported Reuters quoting a source close to the deal. “Vantiv had yet to realise all the synergies from the Worldpay merger but FIS’s offer was too good to be refused,” the source close to the deal reportedly said.
 
“By acquiring Worldpay, FIS should accelerate its revenue growth, significantly expand its position in the merchant acquiring space and generate many synergies,” Michael Schaefer, portfolio manager at Union Investment, and Worldpay shareholder told the media.
 
(Source:www.vccircle.com)