Global Payments has decided to purchase competitor Worldpay from FIS and private equity firm GTCR for $24.25 billion in a three-party transaction, intensifying its emphasis on merchant services in its pursuit of large business clients in a saturated payments industry. In the agreement revealed on Thursday, Global Payments will divest its issuer solutions division, which provides card processing and account services, to FIS for $13.5 billion. The deals will be game-changing for two of the largest digital payment processors globally, as Global will transition to a focused payments processor for businesses. At the same time, FIS will enhance its services tailored to financial institutions, also providing a significant return to GTCR on its investment in Worldpay, which is less than two years after the private equity firm acquired majority ownership.
"In my opinion, from where I stand, this forms a powerhouse of solutions for merchants," said Global Payments CEO Cameron Bready during an interview. The pro forma company would achieve global market leadership owing to the strengths of its integrated products and the extensive range it provides to clients, he stated. The agreement will enable Global Payments to merge Worldpay's capabilities in online and enterprise transactions with its proficiency in catering to small and mid-sized businesses. According to a statement, the newly merged company aims to serve more than six million customers and handle approximately 94 billion transactions in over 175 nations, producing around $12.5 billion in adjusted net revenue and $6.5 billion in adjusted core earnings. The company, located in Atlanta, has been conducting a review of its operations in recent months, divesting smaller segments to simplify its offerings and enhance profits. The Worldpay agreement is its broadest move since purchasing TSYS for over $21 billion in 2019.
Global Payments, Worldpay in Mega-Deal
"Following multiple years of lacklustre merchant organic revenue expansion and what we view as a deficiency in strategic unity, this deal represents a significant move for Global management — and is long-awaited," remarked William Blair analyst Andrew Jeffrey in a note. Negotiations for the deal began months ago when the CEOs of Global Payments, FIS, and Worldpay - Bready, Stephanie Ferris, and Charles Drucker - initiated discussions on how a possible transaction could be arranged to mutually benefit them, as per sources familiar with the situation. According to the agreement, Global Payments will transfer its issuer solutions business to FIS in exchange for a cash payment and FIS's 45 per cent ownership in Worldpay. Global will utilise the proceeds from the issuer solutions, along with additional cash and stock, to purchase GTCR's stake in Worldpay. After the transactions close, anticipated in the first quarter of 2026, the private equity firm will hold a 15 per cent share of Global Payments.
In an interview, FIS Chief Executive Ferris stated, "We are transforming a minority interest that does not generate cash flow into a strategic asset with a promising growth potential." Ferris mentioned that merging its current debit processing operations with Global's issuer solutions division, known for its robust credit processing services, would provide significant cross-selling prospects. According to its statement, FIS predicts over $500 million in extra adjusted free cash flow, which was produced in the first year following the closing.
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According to analysts at TD Cowen in a note, FIS gains advantages that extend beyond asset synergies, as it ultimately clarifies the financial narrative for investors. By concentrating on one element of payments, both companies seek to specialise in a specific business area while also tackling investor worries regarding their ability to compete with newer players, offering improved and more affordable payment solutions.
In recent years, both have faced challenges in achieving share price increases: FIS shares have decreased by over fifty per cent since acquiring Worldpay in 2019. Although the stocks of both firms have lagged behind the S&P 500 index, Global Payments' shares have considerably underperformed compared to competitor FIS in the last year. Global Payments, valued at approximately $17 billion, saw its shares fall by 17.4 per cent on Thursday, whereas FIS, or Fidelity National Information Services, surged by 8.7 per cent. According to sources, the announcement of the deal was made more difficult by broader market volatility, causing the signing of the agreement to be postponed by several days. Goldman Sachs provided guidance to FIS, Wells Fargo advised Worldpay and Morgan Stanley acted as the financial advisor to GTCR.
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