Global Payments acquires Total System Services in huge deal for fintech
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Global Payments acquires Total System Services in huge deal for fintech

Ecommerce player Global Payments, which powers the merchant end of cashless transactions, has just pulled off the latest blockbuster fintech deal of the year, but reaching an agreement to merge with Total System Services, a company that processes payments for card-issuing financial institutions. The resultant company will be a “technology-enabled payments company with extensive scale and unmatched global reach.”

Global Payments’ share price has appreciated by more than 58% year to date

Global Payments July 9

Source: Yahoo Finance

According to Global Payments, the new entity will have a worldwide customer base of 3.5 million merchants, 1,300 financial institutions, and 600 million cardholders. It will facilitate around $50 billion in transactions annually. Global Payments will hold 52% of the company, post-merger, and CEO Jeff Sloan will retain his title in the new company. The transaction is expected to close by the end of the calendar year.

According to Global Payments chief financial officer, Cameron Bready, the synergies and savings resultant from the merger will more than justify it. He said that the agreement will save around $300 million (annualised, within three years) and create about $100 million in “annual revenue synergies.” He explained these financial benefits will be achieved “primarily by aligning merchant business operations and go-to-market strategies, streamlining technology infrastructure, eliminating duplicative corporate and operational support structures, and realizing scale efficiencies.”

He added that there were also additional opportunities presented by the merger, which shouldn’t be overlooked: “But I also don't want to lose sight to maybe the smaller, more tactical opportunities that exist to cross-sell products and solutions across our existing book of SMB [small and medium businesses] customers ... Our ability to sell complementary products that we each have strength in across those base of business customers today is very exciting. Those are small-ticket items each individually. But when you aggregate it across almost 2 million merchant locations in the United States, the numbers start to add up very quickly...”

Disclosure

Dominion holds Global Payments in its Global Trends Managed Fund.


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