US-based payments technology giant Global Payments is to acquire peer Total System Services, aka TSYS, in a stock-based deal valued at around US$21.5 billion, marking the industry’s third major takeover this year.
The agreed $119.86 per share value represents a premium of 20.3% to TSYS’s closing share price on May 23, when reports of a possible deal first appeared. TSYS shareholders will receive 0.8101 of Global Payments shares for each TSYS stock, which represents a premium of 5.7%.
The deal follows Fidelity National Information Services (FIS) agreement in March to pay around $35 billion for payments processor Worldpay, two months after a $22 billion bid by Fiserv for First Data was accepted.
Global Payments, which will retain its name unchanged after combining with TSYS, said that Jeff Sloan will remain as CEO of the merged group, while TSYS’ CEO Troy Woods will become its chairman. The acquisition is expected to close in Q4 of 2019 and the group will have a 12-member board with six directors from each firm.
Global Payments previously grew via acquisition in 2016, when it bought Heartland Payment Systems in a $4.3 billion cash-and-stock deal.
A fast-growing market
The payment technology sector is undergoing rapid transformation via M&As, as companies contend with increased competition from banks moving into digital payments and fintech start-ups such as Adyen and Stripe erode their market share.
The global payment market grew 11% to $1.9 trillion in 2017 as digital payments continued to displace cash. It surpassed $2 trillion last year and is set to reach $3 trillion a year in revenue by 2023, according to consulting firm McKinsey.
Total System processes credit card payments and acts as a bank card issuer, while Global Payments enables merchants to accept various payment types and operate their businesses across a range of distribution channels.
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