Four years after acquiring Worldpay for $43 billion, fintech firm FIS is selling a majority stake in their Worldpay Merchant Solutions business to private equity firm GTCR for $18.5 billion, which includes $1 billion of consideration if returns exceed specified thresholds. GTCR has agreed to make an additional equity capital investment of up to $1.25 billion so Worldpay can pursue “inorganic growth opportunities.” The deal is expected to close in the first quarter of 2024 assuming that all the customary closing conditions are met and regulatory approvals received.
Up front, FIS will receive net proceeds of approximately $11.7 billion, and they will retain 45% ownership in Worldpay which will become a separate, private entity. FIS said the transaction maximizes shareholder value with a valuation of $17.5 billion. With proceeds from the sale, FIS will pay down debt and return capital to shareholders through its existing share repurchase authorization. Funds will also be used for “general corporate purposes.”
“This transaction allows FIS to partially monetize our Merchant Solutions business at an attractive valuation and provides certainty for all stakeholders,” said FIS CEO and President Stephanie Ferris in a news release. “It also allows us to simplify and drive greater focus on delivering innovative, next-generation financial technology and software solutions.”
“At the same time, Worldpay will become a privately held company and benefit from the resources and expertise of GTCR, which has committed additional capital to allow Worldpay to pursue inorganic growth in the rapidly evolving payments space,” Ferris added.
FIS announced in February their intention to do a tax-free spin-off of their Worldpay Merchant Solutions business in the next 12 months. This deal closes that loop. The announcement was made the same day FIS shared their fourth quarter and full year 2022 financials. For the year, the company had total revenue of $14.5 billion, a 5% increase year-over-year. Total revenue included $4.8 billion from Merchant Solutions, representing a 6% increase year-over-year. However, the company reported a total net loss of $(16.7) billion, or $(27.68) diluted earnings per share.
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Charles Drucker to be CEO of Worldpay as a standalone company
Once the deal closes, Charles Drucker, who was the former Executive Chairman and CEO of Worldpay, will become CEO of Worldpay as a standalone business.
“Along with a group of extremely talented payments professionals, we successfully built Worldpay into a truly unique and global business that is well positioned to take advantage of the current dynamics in the payments market as a standalone business,” said Drucker. “I couldn’t be more excited to work with these colleagues and GTCR to win in the global marketplace. The GTCR team has deep knowledge and experience within the financial technology sector, which will help position Worldpay for long-term success. I am extremely confident in the future of the business.”
Based on transactions, Worldpay is one of the largest global merchant acquirers with $2 trillion in payment volume last year. FIS and Worldpay will continue to work together so Worldpay will have access to FIS products for reselling to clients, and FIS will continue to have access to Worldpay’s portfolio of commercial clients to resell their embedded finance products.
Worldpay
Worldpay describes itself as “a seamless payment experience from start to finish, at scale.” It cites the following statistics about its business:
- 300+ payment methods accepted
- Over 1 million merchants supported around the world
- 126 currencies
- 110 million mobile, online and in-store transactions processed daily
- Dedicated customer service available 24/7/365
- Worldpay is used by brands including Amazon, Target, Google, Sotheby’s, Twitch and Microsoft, among others
Insider Take
Because of the February announcement, this deal wasn’t a complete surprise, but it seems like FIS lost money on the deal. If they bought Worldpay for $43 billion in 2019, a 55% stake – the percentage they are selling to GTCR – was worth $23.65 billion. If GTCR only paid FIS $18.5 billion for the 55% stake in 2023, FIS lost $5.15 billion on the deal. We have reached out to FIS to understand any valuation issues that would impact or offset the $5.15 billion loss and will update our article when we hear back.
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