After weeks of reported talks and negotiations, Global Payments and TSYS have officially announced that it has come to an agreement to merge their companies through a massive $21.5 billion deal. The merger will be the third of its kind since the state of the year and will likely have a noticeable effect on the entire financial tech industry as a whole.
The use of digital payments and transfers has grown by leaps and bounds, propelling the industry into new heights. Companies in this particular sector have fought hard to get on top as competition continues to become fierce throughout major economies.
Some firms have chosen to go into mergers and acquisitions to stay competitive. At the start of the year, US-based financial tech company Fiserve announced its $22 billion acquisition of First Data Corp to establish a larger payment and financial technology provider. This was then followed by the $34 billion mergers of Fidelity national Services and WorldPay.
As part of the merger deal between Global Payments And TSYS, the latter's shareholders will be getting a 0.8101 Global Payments shares for each TSYS common stock. Global Payments shareholders will be getting 52 percent of both companies' combined stocks while TSYS shareholders will be getting 48 percent.
Global Payments agreed to pay a 20 percent premium on TSYS's actual share prices as of its closing last week. TSYS's CEO Troy Woods will step down and become chairman of the company, while Global Payments CEO Jeff Sloan will continue as chief executive.
In a prepared statement to the press, Sloan exclaimed that the combination of both companies will establish a leading provider of "unparalleled vertical market and payment software capabilities." The company will be ready to supply at scale to the fast-growing financial technology markets around the world. Sloan also explained that the merger should enhance the company's flexibility and ability to meet changing global demands in the industry.
The combined companies now have a market of over 3.5 million small to medium business across the globe and over 1,300 major financial institutions. The firms have plans to expand their cumulative e-commerce presence in North America. TSYS currently has a large market share in the credit card issuers market, ranking third in the US. Meanwhile, Global Payments is considered a merchant acquirer, which should work hand-in-hand with TSYS' specialties.
According to Sloan, the merger should result in a cost savings of at least $300 million per year as both companies combined their operations. Additional savings will be gained through the removal of redundant infrastructures and personnel. The company is also expecting additional revenues of $100 million through annual synergies and cross-selling on their combined networks.
