FIS may not be quite done with their Christmas shopping. Unconfirmed reports say that it is discussing a mega-deal with Global Payments that would top any of the big payments industry deals that took place in 2019: Fiserv-First Data, FIS-Worldpay, and Global Payments-TSYS. Six legacy payments firms became three, and this would make two.
Transaction volume is king which is typically a big reason to merge. Anti-trust bells would ring at the Justice Department, but there is quite a bit of competition in the payments market now especially from assorted fintechs and expanding payment gateways. Global Payments investors like this potential deal as its stock popped 3% in midday Monday trading, while FIS is down 4%. This will not be the last we will hear about these two firms trying to make a deal.
The following excerpt from a Barron’s article reports more on the topic:
Two of the biggest players in payment processing have reportedly called off merger talks, but analysts are reiterating bullish calls on the stocks, saying the discussions are a good sign for valuations and further consolidation.
Global Payments and Fidelity National Information Services, known as FIS, were close to a merger worth around $70 billion, The Wall Street Journal reported Sunday, citing people familiar with the matter. The companies called off the talks in the last few days, the Journal reported, and there isn’t much chance for an imminent revival.
Global Payments and FIS process card transactions and electronic payments for banks, and they provide the back-end technology and card readers for bricks-and-mortar retailers, a business known as merchant acquisition. They also handle e-commerce payments.
Global Payments is about half the size of FIS in annual revenue, but it is a bigger player in merchant acquisitions and has relationships with international banks and merchants. That would help diversify FIS, which primarily handles processing for banks and capital markets, though it also has a global platform with Worldpay.
Overview by Raymond Pucci, Director, Merchant Services at Mercator Advisory Group