FIS to buy Worldpay in $43bn cash and stock deal

Payments processor Worldpay has agreed to be bought by US financial services technology company FIS in a $43bn deal.

Under the terms of the transaction, Worldpay shareholders will be entitled to receive 0.9287 shares and $11 in cash for each of their shares. FIS shareholders will own around 53% of the combined company, while Worldpay shareholders will own the rest.

FIS said in a statement on Monday that its combination with Worldpay will immediately accelerates its revenue growth profile and offers a best-in-class solution suite to its clients. In addition, it will create "meaningful" revenue growth opportunities across the merchant and banking ecosystems.

The combined company will have pro forma 2018 annual revenue and adjusted EBITDA of about $12.3bn and $4.9bn, respectively and FIS expects to retain its investment grade credit ratings of Baa2 /BBB, reducing leverage to approximately 2.7x in 12 to 18 months and continuing to grow its dividend supported by robust free cash flow.

Gary Norcross, chairman, president and chief executive officer of FIS, said: "Upon closing later this year, our two powerhouse organisations will combine forces to offer a customer-driven combination of scale, global presence and the industry's broadest range of global financial solutions.

"As a combined organisation, we will bring the most modern solutions targeted at the highest growth markets. The long-term value we will create for clients and for shareholders will set the bar in our industry and will create a range of new career opportunities for our employees. I have never been more excited about the future of FIS."

Charles Drucker, executive chairman and CEO of Worldpay, said: "At Worldpay, our focus has always been on delivering more value to our clients and partners and making decisions that achieve our growth and performance objectives. Combining with FIS helps us accelerate the achievement of that, now benefitting from new scale and capabilities that will truly differentiate the company globally."

The combined company will retain the name FIS and will be headquartered in Jacksonville, Florida.

Russ Mould, investment director at AJ Bell, said: "You need scale to win at payments processing and this deal certainly gives the two companies incredible breadth of coverage.

"Worldpay processes billions of payment transactions a year around the world and makes money by collecting fees on these transactions. It also generates an income by advising customers on how to lower costs to credit issuers, card networks and other intermediaries, by settling these transactions in a currency of their choice as well as offering subscription-based data insights and fraud solutions.

"FIS focuses on focus on retail and institutional banking, payments, asset and wealth management, risk and compliance, and outsourcing solutions.

"Parking the two companies together gives the enlarged business a very strong position by which to play the structural growth in digital payments. They will be able to provide clients a wider portfolio of services, suggesting this is a highly complementary corporate tie-up."