THE PROCESSING of payments was once regarded as a boring piece of financial plumbing. So dull, in fact, that even banks shunned it. Fidelity National Information Services, aka FIS, which provides computing systems for thousands of financial institutions, finds pipework positively alluring. On March 18th the Florida-based financial-technology group agreed to take over Worldpay, a payment-processor, for $43bn including debt. The deal is the largest ever in the payments industry.
Consolidation is now reaching a new phase. Propelled by the move to cashless e-commerce, the payments industry is expected to jump from $805bn in annual revenue in 2010 to $2.4trn in 2027, according to BCG, a consultancy. Existing players are rushing to build scale. The Worldpay-FIS deal is “about grabbing that market today, and grabbing it quickly”, Charles Drucker, Worldpay’s executive chairman and chief executive, said when the merger was announced.
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FIS buying Worldpay in $43 billion cash-and-stock dealFinancial services technology group FIS said Monday that it will buy e-commerce and payments group Worldpay Inc. in a cash and stock deal that values the latter at $43 billion. Under terms of the deal, which includes the assumption of debt, Worldpay shareholders will receive 0.9287 FIS shares and $11 in cash per share. At the deal's closing, FIS shareholders will own 53% of the combined company and Worldpay shareholders will own 47%. The new company will have around $12.3 billion pro forma 2018 annual revenue, and FIS' organic revenue growth outlook will accelerate to a range of 6% to 9% through 2021. The company expects $500 million of revenue synergies, $400 million of run-rate expense synergies, which refers to the full-year impact of an event that has occurred for a portion of the year, and nearly $4.5 billion of free cash flow in three years.
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U.S. fintech to buy Worldpay as electronic payments business boomsU.S. fintech Fidelity National Information Services Inc (FIS) has agreed to buy ... You know you are well over the hill when a company you’ve never heard of pays $35 billion for another company you’ve never heard of.
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Payments hype reaches new peak with $43 bln dealU.S. fintech group FIS is buying processor Worldpay for 20 times forward EBITDA. While there’s logic to rolling up companies with fixed costs and sticky clients, the price is punchy even for the fast-growing payments sector. The buyer’s own numbers imply disappointing returns.
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