FIS, Global Payments Held Unsuccessful Talks to Merge

By Cara Lombardo and Dana Cimilluca

Fidelity National Information Services Inc. and Global Payments Inc. recently held unsuccessful talks for a merger deal that could have been valued at around $70 billion, people familiar with the matter said, in a sign that a wave of consolidation is still sweeping through the payments industry.

The companies, which make technology that facilitates merchant payments and banking, were in advanced talks and aiming to announce a deal this coming week before the negotiations broke down in the last few days, the people said. It couldn't be learned what specifically caused them to falter.

Had the companies managed to strike a deal, it would have been the biggest of the year by far, eclipsing several transactions valued at about $40 billion, according to Dealogic. Global Payments has a market capitalization of nearly $59 billion. Fidelity National, widely known as FIS, has a market value of around $90 billion.

Though there is little prospect of the talks coming back to life imminently, they could get revived later, some of the people said.

Atlanta-based Global Payments primarily provides technology and point-of-sale services to merchants. A combination would have expanded FIS's merchant-facing business, which currently accounts for roughly 20% of its revenue. The bulk of the Jacksonville, Fla., company's revenue last year came from serving banks, helping them with such tasks as commercial lending and risk management.

There has been a rush of dealmaking in the sector in recent years as established companies seek to gain economies of scale and better compete with upstarts. Early last year, Fiserv Inc. agreed to pay about $22 billion for First Data Corp. Then FIS struck a $35 billion deal for Worldpay Inc., the largest payments deal to date. Months later, Global Payments did a roughly $22 billion deal for Total Systems Services Inc., which was better known as TSYS.

FIS's deal for Worldpay, which closed in July 2019, expanded its merchant business and brought it into more countries. Global Payments's purchase of TSYS closed in September 2019 and was meant to expand its e-commerce presence in the U.S. and boost market share.

Both companies' chief executives -- FIS's Gary Norcross and Jeffrey Sloan of Global Payments -- are experienced dealmakers and influential figures in a sector with a shrinking number of major players. Mr. Norcross in particular has been open about wanting to continue to grow through acquisitions.

One question likely to have arisen had they struck a deal is whether it would have passed muster with regulators, given it would merge two of the largest companies in the payments industry. But the ground is shifting given the rapid rise of newer rivals such as Adyen NV, Square Inc. and Stripe Inc.

The abortive deal is a fitting coda to an erratic year of dealmaking. The pandemic brought mergers and acquisitions to a virtual halt early in 2020 that persisted through the second quarter. But activity soon snapped back with several megadeals -- especially among sectors that weathered the crisis relatively well such as technology and health care -- and the year's global deal volume trails last year's by just 8%, according to Dealogic.

Together with AstraZeneca PLC's agreement to buy Alexion Pharmaceuticals Inc. for $39 billion, the payments talks underscore what many dealmakers have been saying for weeks -- that with stock prices high, interest rates at rock-bottom levels and many sectors of the economy performing well, the ground is fertile for more big mergers heading into next year.

--Peter Rudegeair contributed to this article.

(END) Dow Jones Newswires

December 20, 2020 13:39 ET (18:39 GMT)

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