Global Payments to Merge With TSYS In a $21.5 billion Transaction

Wednesday, June 19th, 2019

It seems like the fin-tech tie-up delirium is not stopping anytime soon with companies amalgamating in a move to offer frictionless payments. The hysteria went on last month when Global Payments Inc. publicized a $21.5 billion all-stock transaction to partner with Total System Services Inc.

2019 is only halfway, and this is the third such merger in the payments sector. The industry players are looking towards a two-sided platform that can serve both financial firms and retailers.

Fiserv Inc. was the first to go public with its intentions to swallow First Data Corp. early in Jan, and then Fidelity National Information Services Inc. declared it would merge with Worldpay Inc. two months later- in March.

And then last month, the news of a “tie-up of equals” merger between Global Payments and Total System Services (TSYS) went viral.

Global Payments stockholders will own 52 percent of the combine-company and TSYS stockholders will own the other 48 percent.

According to Global Payments CEO, Jeff Sloan, “this merger will speed up the plans Global Payments has had over the past years to gain an edge in the most lucrative markets with a top worldwide payments company and an omnichannel solutions provider for online merchants.”

Sloan added that the agreement was in line with the firm’s recent moves to make a more software-centric business, an approach that has led to more growth and opportunities.

And while TSYS hasn’t been growing as fast as Global Payments, Chief Financial Officer for the latter, Cameron Bready is positive the deal won’t interfere with Global Payments’ dreams to achieve its medium-term goals of a high one-digit to low two-digit annual revenue growth as well as adjusted earnings increases of 16 to 18 percent.

The company is anticipating at least $300 million-per-year run-rate cost synergies and expects that the deal will accrue earnings to mid-single digits by 2020.

Furthermore, the deal is intriguing considering the impending Payment Services regulation changes in Europe, which will require that banking institutions provide open-banking applications to third-parties in the banking sector and elsewhere.

Analysts are predicting that the combined-company will eventually offer a one-stop merchant-processing platform and witness synergies from selling Application Programme interfaces.

Wrapping Up

This billion-dollar merger will provide an opportunity for Global Payments and TSYS as it creates a scalable merchant acquirer with a stronger foothold in microbusiness-focused integrated payments and omnichannel solutions.