Is Global Payments the next big acquisition target in the payment processing world?
It’s a busy time in the payments processing world, which has just seen two major acquisitions: Fiserv bought First Data, and Fidelity National Information purchased WorldPay. Understandably, investors are wondering why this spate of big time M&A is happening, and who’s next on the auction block. At least, that’s what MoffettNathanson analyst Lisa Ellis thinks – and, according to Ms. Ellis, the answer to that last question might just be “Global Payments”.
Global Payments’ share price has appreciated by 33% year to date
Source: Yahoo Finance
Why are we seeing this consolidation? In a note last Wednesday, Ellis suggested the answer is simple. Paraphrased by Bloomberg: “rapid ecommerce growth, the digitization of payments in Europe, Latin America and Asia, and consumer demand for capabilities such as “order ahead” are causing deals to flourish.”
So, if Global Payments is the target, who looks like a buyer? According to Ellis, the company could be a “solid strategic fit” for JPMorgan Chase & Co., or fit in well with “the new Fiserv-FDC”. Other possibilities include Square Inc. or Stripe Inc.
Of course, it might be the case that Global Payments would rather buy than be bought. If that comes to pass, Ellis thinks an “outside the US” player like Worldline or PagSeguro is a possibility.
Ellis was quick to point out that other deals could be looming on the horizon too. PayPal’s recent investment in Brazilian MercadoLibre Inc. is “just the beginning” and Ellis thinks “the company is sitting on a pile of cash and needs to expand its global footprint as its core US and UK markets mature.”
In other words – we might not know exactly who’s buyer and who’s buying… but things look like they’re going to be interesting in the payments sector for a while!
Dominion holds both Global Payments and PayPal in its Global Trends Ecommerce Fund.
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