FIS and Worldpay to Merge in a Deal Worth $43 Billion

Last week, financial services technology firm FIS (NYSE: FIS) announced that it has entered into a definitive agreement with global ecommerce and payments provider

Payments News: FIS and Worldpay to Merge in a Deal Worth $43 Billion

Source: FIS

Last week, fintech provider FIS (NYSE: FIS) announced that it has entered into a definitive agreement with global ecommerce and payments provider Worldpay, Inc. (NYSE: WP) to merge the two companies. Offering complementary ecommerce and payment processing solutions, the merger will help FIS significantly expand its capabilities while providing Worldpay with expanded distribution capabilities and will help the combined company provide best-in-class enterprise banking, payments, capital markets and global ecommerce capabilities to customers around the world.

The deal is estimated to be worth approximately $43 billion, which includes FIS’s assumption of Worldpay debt, which it will likely refinance. Upon closing the deal, FIS shareholders will own approximately 53 percent of combined company’s shares and Worldpay shareholders will own approximately 47 percent. Pending regulatory approval, the deal is expected to close in the second half of 2019.

In a March 18 news release, FIS outlined highlights of the deal:

  • Annual revenue and EBITDA: Together, the new company will have approximately $12.3 billion in pro forma 2018 annual revenue. Adjusted EBITDA will be approximately $4.9 billion.
  • Revenue growth: FIS’s organic revenue growth will increase from 6 percent to 9 percent through 2021.
  • Synergies: The companies expect to find $500 million in revenue synergies, $400 million in run-rate synergies, and $4.5 billion of free cash flow in three years, providing shareholders with significant value.
  • Management: The companies have a track record of innovative leadership, strong integration and exceeding targets.

Upon completion of the deal, the combined company will retain the FIS name and be headquartered in Jacksonville, Florida. Of the 12-member board of directors, seven will come from FIS and five will come from Worldpay. Gary Norcross will remain the FIS board chairman, president and CEO. Charles Drucker, who currently serves as executive chairman and CEO of Worldpay, will serve as executive vice chairman of the board.

“Scale matters in our rapidly changing industry. Upon closing later this year, our two powerhouse organizations will combine forces to offer a customer-driven combination of scale, global presence and the industry’s broadest range of global financial solutions,” said Norcross.

“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,” Norcross added.

As a Fortune 500 company, FIS currently serves more than 20,000 clients in 130 countries. It employs more than 47,000 people around the world.

Drucker also commented on the pending merger.

“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 Drucker. “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.”

Worldpay processes more than 40 billion transactions a year, and it supports more than 300 payment types in 146 countries and in 126 currencies.

Payments News: FIS and Worldpay to Merge in a Deal Worth $43 Billion

Source: Worldpay

Insider Take:

This merger is a huge deal in the fintech-payment processing world. Combining these two companies will provide huge advantages to both, particularly in terms of accelerated expansion, while also saving the individual companies money and providing strong value for their shareholders. The key to success will be in integrating the two companies, so the merger is seamless to current and prospective clients.

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