Worldpay is one of the largest global merchant acquirers by transactions with $2 trillion in payments volume in 2022.

Financial services technology leader FIS has pushed ahead with its separation plan to create two distinct global companies for increased strategic flexibility and a reduction in debt. The company has entered into a definitive agreement to sell a majority stake in its Worldpay Merchant Solutions business to private equity funds managed by GTCR. The transaction values Worldpay at $18.5 billion, including $1 billion contingent on certain returns achieved by GTCR.

FIS will receive net proceeds of approximately $11.7 billion and retain a non-controlling 45% ownership in a new joint venture. The upfront valuation represents a 9.8-times multiple on expected fiscal 2023 adjusted EBITDA and offers significant potential for further growth. (FIS)

The deal allows FIS and Worldpay to focus on their respective businesses and simplifies operations. The upfront cash proceeds provide immediate capital allocation flexibility, enabling FIS to pay down debt and return capital to shareholders.

It may be recalled that following pressure from hedge funds D.E. Shaw and Jana Partners, FIS conducted a strategic review that led to this deal. In 2019, FIS acquired Worldpay for $43 billion, bolstering its merchant business involved in transaction processing for companies. However, the emergence of financial technology startups eroded its market share, prompting FIS to contemplate spinning off the unit. In February, FIS announced plans for the spin-off after recording a significant write-down of $17.6 billion.

GTCR has also committed up to $1.25 billion in additional equity capital to support Worldpay’s inorganic growth opportunities. FIS CEO Stephanie Ferris said the transaction would monetize the Merchant Solutions business, provide certainty to stakeholders, and enhance FIS’s focus on delivering innovative financial technology solutions.

Worldpay, as a privately held company, will benefit from GTCR’s resources and expertise, aiming to excel in the evolving payments space.

Charles Drucker, incoming Worldpay CEO, believes the separation will position Worldpay for long-term success and innovation in merchant payment solutions.

The transaction allows Worldpay to continue its leadership in commerce solutions for merchants, while FIS remains a prominent provider of financial technology solutions globally. Both companies will maintain commercial agreements, ensuring access to each other’s products and client portfolios to minimize dis-synergies.

The transaction is expected to close in Q1 2024, subject to regulatory approvals and customary closing conditions.

Related Story:  Another Consolidation Among Legacy Payment Players; Worldline Buys Ingenico