Against a market backdrop effervescent with M&A activity, payments giant Worldpay (US:WPY; UK:WP) has attracted yet another suitor. Indeed, the group – which processes more than 40bn transactions every year – has agreed to be bought by US-based financial services technology group FIS (US:FIS) for a huge $43bn (£32.6bn). This includes Worldpay’s debt, which FIS expects to refinance.
Under the terms of the agreement, described as a merger, Worldpay shareholders will be entitled to 0.9287 FIS shares and $11 in cash for every Worldpay share. Upon closure – which is anticipated in the second half of 2019 – FIS shareholders will own around 53 per cent of the enlarged group. Worldpay shareholders will own around 47 per cent. The company will keep the name FIS and will be based in Jacksonville, Florida.
The deal is "subject to receipt of required regulatory and shareholder approvals and other customary closing conditions". That said, all being well, its completion would not mark the first time that Worldpay has changed hands. Far from it.
The Royal Bank of Scotland (RBS) sold a majority stake in Worldpay to Advent International and Bain Capital in 2010, before offloading the remainder to the same pair in 2013. In October 2015, Worldpay floated on the London Stock Exchange. Less than two years later – in the summer of 2017 – it recommended a £9.3bn tie-up with US peer Vantiv. That deal became official in January 2018, unleashing a global payments behemoth with a primary listing in New York and a secondary listing in London.
As to why this latest deal has attracted so much attention, chairman, president and chief executive officer at FIS, Gary Norcross, says "scale matters" in a rapidly changing industry. The companies’ complementary services will offer clients "omni-channel payment and multi-currency capabilities, robust risk and fraud solutions and advanced data analytics". Moreover, combined pro-forma annual revenues would be around $12.3bn for 2018, with adjusted cash profits of $4.9bn. Total cash-profit synergies of around $700m are anticipated over the next three years, thanks to a blend of "revenue and expense opportunities".
