FIS has announced that it has sold off a majority stake in its Worldpay Merchant Solutions arm to private equity firm GTCR.
The deal was reportedly valued at $15bn, which Payment Expert commented on in a recent piece. FIS has now officially confirmed the price to be $18.5bn, including $1bn of consideration contingent if GTCR returns exceed certain thresholds.
The valuation equates to 9.8x the expected fiscal 2023 adjusted EBITDA, taking estimated dis-synergies and unallocated corporate costs into consideration while also being aligned with other leading players in the payments space.
More details reveal that FIS is set to receive upfront net proceeds of around $11.7b, keeping a 45% ownership in a new standalone joint venture. According to the firm, this has been unanimously approved by its Board of Directors.
FIS CEO and President Stephanie Ferris commented: “This transaction allows FIS to partially monetize our Merchant Solutions business at an attractive valuation and provides certainty for all stakeholders.
“It also allows us to simplify and drive greater focus on delivering innovative, next-generation financial technology and software solutions. At the same time, Worldpay will become a privately held company and benefit from the resources and expertise of GTCR, which has committed additional capital to allow Worldpay to pursue inorganic growth in the rapidly evolving payments space.
“I am grateful to our team for their hard work in preparing for a separation, which has positioned us to execute seamlessly on this transaction. I am also proud that FIS will maintain a meaningful minority stake in Worldpay and participate on the Worldpay Board, allowing us to continue our strong commercial partnership and benefit from continued upside in the business. We are excited to partner with GTCR given its successful history of value creation in collaboration with corporate partners.”
As per FIS, the upfront payment will unlock an “immediate capital allocation flexibility”, allowing the payments firm to settle its debt and bring additional returns to shareholders through share repurchasing while maintaining a good investment grade credit rating.
GTCR has also allocated an additional equity capital investment in Worldpay of up to $1.25b “to pursue inorganic growth opportunities”.
Collin Roche, Co-CEO and Managing Director at GTCR, added: “As a firm, we have a long history of investing in the payments sector, and that experience provides us with tremendous confidence in the opportunity for sustained, long-term growth at Worldpay. We look forward to partnering with FIS to deliver value for customers and other stakeholders.”
It is understood that FIS and Worldpay will enter a commercial agreement in order to minimise potential disruptions and customer setbacks. Both firms will retain access to each other’s product catalogue and network of financial and commercial clients.
Moreover, after the transaction is closed, it is expected that Charles Drucker will take on the role as the new CEO of Worldpay.
“We are thrilled to be working with Charles and the Worldpay leadership team to build on the company’s culture of innovation, invest in new capabilities and advance its leadership position across channels and geographies,” Roche commented.
Drucker himself added on his appointment, stating: “This new separation path positions Worldpay for immediate success, combining the benefits of a well-established global brand and group of talented payments professionals with the energy of an independent startup, all backed by a world-class private equity firm.
“I’m excited to be working with my former colleagues and GTCR to win in the marketplace and position Worldpay for long-term success. With the support of GTCR’s resources and expertise, and continuing to partner with FIS, I believe that Worldpay will create and define the future of merchant payment solutions.”
