BY Richard Summerfield
US FinTech Fidelity National Information Services Inc (FIS) has agreed to acquire payment processor Worldpay for about $35bn.
The deal will see Worldpay shareholders receive 0.9287 FIS shares and $11.00 in cash for each share of Worldpay held - a premium of about 14 percent based on the last day of trading before the deal was announced. Upon closing of the transaction, FIS shareholders will own approximately 53 percent and Worldpay shareholders will own approximately 47 percent of the combined company.
The deal values Worldpay at around $43bn, inclusive of debt. FIS and Worldpay combined will have annual revenues of about $12bn and adjusted core earnings of around $5bn.
The merger is the biggest deal announced in the electronic payments industry to date. It comes as more consumers utilise digital payments, rather than cash. Worldpay, the companies noted in a press release, processes over 40 billion transactions annually, supporting more than 300 payment types across more than 120 currencies.
“Scale matters in our rapidly changing industry,” stated Gary Norcross, chairman, president and chief executive of FIS. “Upon closing later this year, our two powerhouse organisations will combine forces to offer a customer-driven combination of scale, global presence and the industry’s broadest range of global financial solutions. As a combined organization, we will bring the most modern solutions targeted at the highest growth markets. The long-term value we will create for clients and for shareholders will set the bar in our industry and will create a range of new career opportunities for our employees. I have never been more excited about the future of FIS.”
“At Worldpay, our focus has always been on delivering more value to our clients and partners and making decisions that achieve our growth and performance objectives. Combining with FIS helps us accelerate the achievement of that, now benefitting from new scale and capabilities that will truly differentiate the company globally,” said Charles Drucker, executive chairman and chief executive of Worldpay. “We are proud to become part of one of the financial services industry’s most respected and consistently performing companies, and I am excited about the new opportunities this brings both for the business and our colleagues worldwide.”
The deal is expected to generate an organic revenue growth outlook of 6 to 9 percent through 2021, and $700m of total core earnings savings over the next three years. Furthermore, the companies expect to generate $500m of revenue savings and aim to deliver nearly $4.5bn of free cash flow in three years.