US fintech giant Fidelity National Information Services, aka FIS, has agreed to take over global payments processor Worldpay for US$43 billion including debt, marking the largest-ever deal in the payments industry.
It will give FIS shareholders about 53% of the combined company with Worldpay shareholders having the remaining 47% stake. Once the deal is closed, FIS-Worldpay will offer a range of services for businesses and financial institutions including enterprise banking, payments, capital markets, and e-commerce services.
Worldpay processes more than 40 billion transactions each year and supports more than 300 payment types in more than 120 currencies.
FIS chairman and chief executive Gary Norcross acknowledged that industry consolidation was the rationale behind the merger. “Scale matters in our rapidly changing industry,” he said, noting that combined the company will have scale, global presence and a broad range of global financial services.
Retaining the name
The combined company will maintain the FIS name and be headquartered in Jacksonville, Florida. FIS gets seven seats on the combined company’s 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 merger, the largest deal to date for the payments industry, follows Fiserv’s acquisition in January of the payment processor First Data for $22 billion. Both reflect pressure on industry players in recent years to cut costs, build new products and expand their customer bases as fintech start-ups make inroads into market share by offering lower fees.
Wordpay was originally owned by Royal Bank of Scotland (RBS), which sold the unit in 2010 as it attempted to raise capital. In 2017, Worldpay Group was acquired by Vantiv for $10.6 billion. FIS paid $5.1 billion to acquire financial software provider Sungard in 2015. Once the latest deal is completed the combined FIS-Worldpay will be the world’s largest processing and payments company, jumping ahead of Fiserv.
Industry analysts largely agreed that the acquisition was an adept one and that with the deal FIS gets access to the “crown jewel” at Worldpay e-commerce services. One analyst commented: “FIS’s acquisition of WP makes long-term strategic sense, in our view, nurturing the ecosystem of a cohesive merchant acquiring and bank processing franchise.”
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