Financial technology firm Fidelity National Information Services (FIS) has announced plans to buy payment processor company Worldpay for US$35 billion. Both companies reportedly came to an agreement, with FIS agreeing to purchase the company for the specific amount. The deal is currently one of the largest acquisitions in the booming digital payment industry.
FIS' offer for Worldpay is slightly below its estimates of what the company is worth. According to the US-based financial technology services and outsourcing provider, it valued Worldpay to be around US$43 billion, with all of its debts included. Worldpay also includes assets from US credit card processing firm Vantiv, which merged with the company in a deal worth over US$10.63 billion.
The latest acquisition follows several other merger and consolidations in the financial technology and payments processing industry. Firms in this sector are now rapidly expanding and merging to better compete with startups in providing better platforms for digital payments.
FIS has had dozens of acquisitions in the past, which includes the acquisition of SunGard for US$9.1 billion in 2015 and Clear2Pay for US$480 million in 2014. The recent acquisitions have allowed FIS to diversify its global services, which now includes banking software, payments processing, and other technologies associated with financial services. Following the news, Worldpay's shares in London rose by as much as 9.4 percent at the start of the week.
When the acquisition is finalized, Worldpay shareholder will be getting US$11 in cash per share plus a 0.9 to 1 ratio of FIS shares. This basically equates to a per share value of the company of around US$112.12. With the acquisition, the operation of both companies is estimated to generate revenues of around US$12 billion. The bulk of the combined revenue value will still come from FIS's global revenue, which reached almost US$10 billion in 2016. As for FIS shareholders, they will now own around 53 percent of the consolidated company, with Worldpay shareholders owning 47 percent.
FIS revealed that they had assistance from both Goldman Sachs and Centerview Partners, which served as its financial advisers for the acquisition. Willkie Farr & Gallagher reportedly handled all of the legalities for the massive deal.
Worldpay started out as an online multi-currency payment system in 1997. It was originally operating under the Fifth Third Bancorp until it became a stand-alone company in 2009. The company was then listed on the London Stock Exchange in 2015 with a total valuation of around US$6.36 billion.
