Third $20b+ payments merger in five months…
The crunch of tectonic plates shifting in the payments sector is far from over: just 10 weeks after FIS announced plans to buy the UK’s Worldpay for $35 billion, Atlanta-headquartered financial technology giant Global Payments has unveiled a $21.5 billion all-stock agreement to acquire Total System Services (TSYS).
The deal also follows Fiserv’s $39 billion deal to buy First Data earlier this year, and comes amid a rising threat to traditional payments companies from insurgent fintech/payments startups like Square and Stripe, not to mention the looming threat from “big tech” quarters; whether of US or Chinese persuasion.
On closing the deal with NYSE-listed TSYS, Global Payments will process over 50 billion transactions annually in 38 countries physically and over 100 countries virtually, and serve 3.5 million small and medium-sized enterprise (SME) merchant locations globally. It will also have a 3,500-strong salesforce.
The combined company is expected to generate approximately $8.6 billion net revenue and network fees. In a sign of the pressure to take a more developer-centric approach and ease emphasis on legacy stack, the combined company will focus on “accelerating cloud migrations” with a focus on a “move to cloud-enabled platforms” and “Open APIs/API-first development”, a Global Payments investor presentation said.
— Global Payments Inc. (@GlobalPayInc) May 28, 2019
Global Payments provides a range of services but is predominantly a merchant acquirer – i.e. it provides services that let merchants accept credit and debit cards, along with other payment types. Total Systems operates in a broadly similar payments space, albeit with a focus on processing card payments, it also acts as a bank card issuer.
Global Payments: “We’ll Accelerate TSYS’s Modernisation Efforts”
“The combination of Global Payments and TSYS establishes the leading pure play payments technology company with unparalleled vertical market and payment software capabilities and ecommerce and omnichannel solutions, operating at scale in fast growing markets globally,” said Jeff Sloan, Global Payments’ CEO.
The two will “extend their leadership” in software, a release noted: “The combination of Global Payments and TSYS will create one of the largest software companies in the United States with an emphasis on payments. Over 6,000 of the company’s employees will be dedicated to developing market leading technologies.
“Global Payments expects to accelerate TSYS’ modernization efforts and legacy of innovation in card issuing, as TSYS continues to focus on a product driven strategy as it moves increasingly towards more cloud-based functionality.”