Key facts
- Planned separation to create two market leading companies with
greater strategic flexibility and operational focus to capitalize
on respective growth and margin opportunities in rapidly evolving
markets.
- Former Worldpay CEO Charles Drucker named as strategic advisor
to aid with separation and ongoing business review; to be CEO of
Merchant Solutions business after spin-off.
- FIS and Worldpay to maintain a commercial relationship,
preserving a key value proposition for clients of both businesses
and minimizing potential dissynergies.
- Management to discuss planned separation, fourth quarter and
full-year 2022 earnings results on conference call at 8:30 a.m. ET
today.
FIS® (NYSE: FIS or “the Company”), a global leader in financial
services technology, today announced plans to pursue a tax-free
spin-off of its Merchant Solutions business to strengthen its
strategic and operational focus, capitalize on growth opportunities
and unlock shareholder value. The two companies expect to maintain
a strong commercial relationship, preserving a key value
proposition for clients of both businesses. FIS expects the
spin-off to be completed within the next 12 months.
FIS’ Board and management determined as part of their previously
announced and ongoing strategic review that a spin-off of Merchant
Solutions, to be named Worldpay, offers the best path to enhance
shareholder value, including by:
- Increasing strategic and operational focus to capitalize on
growth and margin potential
- Aligning capital allocation and capital structures with
long-term growth targets and underlying market needs, including
potentially participating in M&A
- Enhancing the ability to align talent with shareholder returns,
including through competitive and focused equity compensation
programs
Leadership Commentary
“In evaluating a broad range of alternatives as part of our
previously announced comprehensive assessment of FIS’ strategy,
businesses, operations, and structure, FIS management and the Board
concluded that the spin-off of Worldpay will unlock shareholder
value by improving both companies’ performance, enhancing client
services, and simplifying operational management,” said Jeffrey A.
Goldstein, Chairman of the Board. “We are confident that this is
the right time for the separation of Worldpay. The pace of
disruption in payments is rapidly accelerating, requiring increased
investment in growth and a different capital allocation strategy
for our Merchant Solutions business. This spin-off will create two
industry-leading, publicly traded companies with sharper focus and
increased agility, each well positioned to capitalize on the
significant value creation opportunities ahead in their respective
markets.”
CEO and President Stephanie Ferris said, “I’m confident that
today’s announcement advances our goal of optimizing for
performance and returns while improving the satisfaction of our
clients and colleagues. We will create two more focused, agile
companies that can pursue tailored strategies that are aligned with
specific long-term growth opportunities. Both companies will be
market leaders in their own right, and we believe that, as separate
companies with a commercial relationship, we will deliver a
superior outcome. Specifically, the separation will enable FIS to
target a strong investment grade credit rating, while allowing
Worldpay to invest more aggressively for growth. We believe this
approach will best position us to drive innovation and deliver the
most competitive products and solutions, benefitting our employees,
clients, partners and shareholders.”
Worldpay
Upon completion of the proposed spin-off, the Merchant Solutions
business will operate as Worldpay, reestablishing and strengthening
a brand that remains highly trusted among clients and partners.
Worldpay, the largest global merchant acquirer1 by transactions
with $2 trillion in payments volume in 2022, will remain a leading
provider of integrated payment technology solutions for eCommerce,
enterprise, and small and medium sized businesses (SMB). Worldpay
is a leader in cross-border eCommerce, with $4.8 billion of revenue
and $2.3 billion of Adjusted EBITDA in 2022. The business’ revenue
was comprised of 43% enterprise, 27% SMB, and 30% eCommerce in
2022.
As an independent, publicly traded company, Worldpay is well
positioned to benefit from exposure to secular high-growth markets
globally, extensive domain expertise and portfolio breadth, strong
long-term and marquee client relationships, and global distribution
and scale. In addition, with a different capital allocation
strategy, Worldpay will be able to pursue more aggressive
investment opportunities, including M&A, in order to:
- Expand in eCommerce – expanding geographic coverage and
payment optimization
- Strengthen its Enterprise Offerings – leveraging its
powerful value proposition to drive next-generation omni-channel
experiences and enterprise commerce
- Transform SMB – shifting towards software-led payments
while providing integrated software vendors (ISVs) with embedded
finance capabilities
FIS announced Charles Drucker has been appointed as a strategic
advisor to aid with the spin-off process, effective immediately.
The Company also announced today that, if the spin-off is completed
as expected, he will serve as CEO of Worldpay. Drucker, a proven
value creating CEO who previously served as CEO of Worldpay, brings
decades of experience within the financial technology industry and
a strong track record of shareholder value-creation.
The remainder of the Worldpay Board of Directors, management
team, and headquarters will be announced at a later date. Worldpay
and FIS will continue to maintain a commercial relationship to
deliver critical capabilities like embedded finance and loyalty
through premium payback, with customary commercial agreements in
place to ensure continuity for clients.
FIS
Following the proposed spin-off, FIS will remain a leading
provider of financial technology solutions for financial
institutions, capital markets firms, clients and corporates
globally. FIS’ Banking and Capital Markets businesses generated
$9.5 billion of revenue and $4.2 billion of Adjusted EBITDA in
2022, excluding Corporate and Other. The Company will continue to
benefit from its strong brand in the financial services sector,
extensive domain expertise and portfolio breadth, strong long-term
and marquee client relationships, and its global distribution and
scale.
As a simpler, more focused organization, FIS will be
better-positioned to deliver compounding returns by leveraging its
best-in-class suite of banking and capital markets technology
solutions to meet individualized client needs. FIS will drive
improved performance and outcomes through a multi-part strategy
that includes:
- Enhancing focus on the distinct needs of global and
local financial institutions, with a management team and investment
agenda tailored to evolving client needs
- Driving disruption through a modernized technology
stack, building out its digital and modernization platforms such as
Digital One, Payment One, Unity and Modern Banking platform
- Optimizing investment and capital return through a
transparent capital allocation strategy with a balance of organic
investment, complementary M&A, dividends and share
repurchases
Following the separation, Stephanie Ferris will continue to
serve as chief executive officer of FIS with FIS headquarters
remaining in Jacksonville, FL.
Transaction Details
Through this transaction, FIS shareholders will receive a pro
rata distribution of shares of Worldpay stock in a transaction that
is expected to be tax-free to FIS and its shareholders for U.S.
federal income tax purposes. The actual number of shares to be
distributed to FIS shareholders will be determined prior to
closing, as will the specific transaction structure.
FIS is committed to optimizing strong capital allocation
strategies for each business that align with each business’s
long-term goals. Further details related to transaction costs and
the companies’ respective capital structures, governance and other
elements of the transaction will be announced at a later date.
Pathway to Completion
FIS is planning for the separation to be completed within the
next 12 months. The proposed separation is subject to customary
conditions, including final approval by the FIS Board of Directors,
receipt of a tax opinion and a private letter ruling from the
Internal Revenue Service, the filing and effectiveness of a Form 10
registration statement with the U.S. Securities and Exchange
Commission and obtaining of all required regulatory approvals. No
assurance can be given that a spin-off will in fact occur on FIS’
desired timetable or at all.
Fourth Quarter and Full-Year 2022 Results and Webcast
In a separate press release issued today, FIS announced its
fourth quarter and full-year 2022 results and provided its outlook
for 2023. The Merchant Solutions business is included in, and the
separation does not impact, FIS’ fiscal 2023 guidance.
FIS will sponsor a live webcast of its earnings conference call
with the investment community to discuss its fourth quarter and
full year 2022 earnings results and the proposed spin-off beginning
at 8:30 a.m. (ET) on Monday, February 13, 2023. To access the
webcast, go to the Investor Relations section of FIS’ homepage,
www.fisglobal.com. A replay will be available after the conclusion
of the live webcast.
About FIS
FIS is a leading provider of technology solutions for financial
institutions and businesses of all sizes and across any industry
globally. We enable the movement of commerce by unlocking the
financial technology that powers the world’s economy. Our employees
are dedicated to advancing the way the world pays, banks and
invests through our trusted innovation, system performance and
flexible architecture. We help our clients use technology in
innovative ways to solve business-critical challenges and deliver
superior experiences for their customers. Headquartered in
Jacksonville, Florida, FIS is a member of the Fortune 500® and the
Standard & Poor’s 500® Index. To learn more, visit
www.FISglobal.com. Follow FIS on Facebook, LinkedIn and Twitter
(@FISglobal).
Forward Looking Statements
This release contains “forward-looking statements” within the
meaning of the U.S. federal securities laws. Statements that are
not historical facts, including statements about anticipated
financial outcomes, including any earnings guidance or projections,
projected revenue or expense synergies or dis-synergies, business
and market conditions, outlook, foreign currency exchange rates,
deleveraging plans, expected dividends and share repurchases of the
Company and the independent companies following the proposed
spin-off, the Company’s and the independent companies’ sales
pipeline and anticipated profitability and growth, the outcome of
our previously announced comprehensive assessment referred to in
this release, as well as other statements about our expectations,
beliefs, intentions, or strategies regarding the future, or other
characterizations of future events or circumstances, including
statements with respect to certain assumptions and strategies of
the Company and the independent companies following the proposed
spin-off, the anticipated benefits of the spin-off, and the
expected timing of completion of the spin-off are forward-looking
statements. These statements may be identified by words such as
“expect,” “anticipate,” “intend,” “plan,” “believe,” “will,”
“should,” “could,” “would,” “project,” “continue,” “likely,” and
similar expressions, and include statements reflecting future
results or guidance, statements of outlook and various accruals and
estimates. These statements relate to future events and our future
results and involve a number of risks and uncertainties.
Forward-looking statements are based on management’s beliefs as
well as assumptions made by, and information currently available
to, management.
Actual results, performance or achievement could differ
materially from these forward-looking statements. The risks and
uncertainties to which forward-looking statements are subject
include the following, without limitation:
- changes in general economic, business and political conditions,
including those resulting from COVID-19 or other pandemics, a
recession, intensified international hostilities, acts of
terrorism, increased rates of inflation or interest, changes in
either or both the United States and international lending, capital
and financial markets or currency fluctuations;
- the risk of losses in the event of defaults by merchants (or
other parties) to which we extend credit in our card settlement
operations or in respect of any chargeback liability, either of
which could adversely impact liquidity and results of
operations;
- the risk that acquired businesses will not be integrated
successfully or that the integration will be more costly or more
time-consuming and complex than anticipated;
- the risk that cost savings and synergies anticipated to be
realized from acquisitions may not be fully realized or may take
longer to realize than expected;
- the risks of doing business internationally;
- the effect of legislative initiatives or proposals, statutory
changes, governmental or applicable regulations and/or changes in
industry requirements, including privacy and cybersecurity laws and
regulations;
- the risks of reduction in revenue from the elimination of
existing and potential customers due to consolidation in, or new
laws or regulations affecting, the banking, retail and financial
services industries or due to financial failures or other setbacks
suffered by firms in those industries;
- changes in the growth rates of the markets for our
solutions;
- the amount, declaration and payment of future dividends is at
the discretion of our Board of Directors and depends on, among
other things, our investment opportunities, results of operations,
financial condition, cash requirements, future prospects, and other
factors that may be considered relevant by our Board of Directors,
including legal and contractual restrictions;
- the amount and timing of any future share repurchases is
subject to, among other things, our share price, our other
investment opportunities and cash requirements, our results of
operations and financial condition, our future prospects and other
factors that may be considered relevant by our Board of Directors
and management;
- failures to adapt our solutions to changes in technology or in
the marketplace;
- internal or external security breaches of our systems,
including those relating to unauthorized access, theft, corruption
or loss of personal information and computer viruses and other
malware affecting our software or platforms, and the reactions of
customers, card associations, government regulators and others to
any such events;
- the risk that implementation of software, including software
updates, for customers or at customer locations or employee error
in monitoring our software and platforms may result in the
corruption or loss of data or customer information, interruption of
business operations, outages, exposure to liability claims or loss
of customers;
- uncertainties as to the timing of the potential separation of
the Merchant Solutions business or whether it will be
completed;
- risks associated with the impact, timing or terms of the
proposed spin-off;
- risks associated with the expected benefits and costs of the
proposed spin-off, including the risk that the expected benefits of
the proposed spin-off will not be realized within the expected
timeframe, in full or at all, and the risk that conditions to the
proposed spin-off will not be satisfied and/or that the proposed
spin-off will not be completed within the expected timeframe, on
the expected terms or at all;
- the expected qualification of the proposed spin-off as a
tax-free transaction for U.S. federal income tax purposes,
including whether or not an IRS ruling will be sought or
obtained;
- the risk that any consents or approvals required in connection
with the proposed spin-off will not be received or obtained within
the expected timeframe, on the expected terms or at all;
- risks associated with expected financing transactions
undertaken in connection with the proposed spin-off and risks
associated with indebtedness incurred in connection with the
proposed spin-off, including the potential inability to access or
reduced access to the capital markets or increased cost of
borrowings, including as a result of a credit rating
downgrade;
- the risk that dis-synergy costs, costs of restructuring
transactions and other costs incurred in connection with the
proposed spin-off will exceed our estimates or otherwise adversely
affect our business or operations;
- the impact of the proposed spin-off on our businesses and the
risk that the proposed spin-off may be more difficult,
time-consuming or costly than expected, including the impact on our
resources, systems, procedures and controls, diversion of
management’s attention and the impact on relationships with
customers, governmental authorities, suppliers, employees and other
business counterparties;
- the reaction of current and potential customers to
communications from us or regulators regarding information
security, risk management, internal audit or other matters;
- the risk that policies and resulting actions of the current
administration in the U.S. may result in additional regulations and
executive orders, as well as additional regulatory and tax
costs;
- competitive pressures on pricing related to the decreasing
number of community banks in the U.S., the development of new
disruptive technologies competing with one or more of our
solutions, increasing presence of international competitors in the
U.S. market and the entry into the market by global banks and
global companies with respect to certain competitive solutions,
each of which may have the impact of unbundling individual
solutions from a comprehensive suite of solutions we provide to
many of our customers;
- the failure to innovate in order to keep up with new emerging
technologies, which could impact our solutions and our ability to
attract new, or retain existing, customers;
- an operational or natural disaster at one of our major
operations centers;
- failure to comply with applicable requirements of payment
networks or changes in those requirements;
- fraud by merchants or bad actors; and
- other risks detailed in the “Risk Factors” and other sections
of our Annual Report on Form 10-K for the fiscal year ended
December 31, 2021, in our quarterly reports on Form 10-Q, in our
current reports on Form 8-K and in our other filings with the
Securities and Exchange Commission.
Other unknown or unpredictable factors also could have a
material adverse effect on our business, financial condition,
results of operations and prospects. Accordingly, readers should
not place undue reliance on these forward-looking statements. These
forward-looking statements are inherently subject to uncertainties,
risks and changes in circumstances that are difficult to predict.
Except as required by applicable law or regulation, we do not
undertake (and expressly disclaim) any obligation and do not intend
to publicly update or review any of these forward-looking
statements, whether as a result of new information, future events
or otherwise.
1 Nilson Report – October 2022
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230213005223/en/
Media Kim Snider Senior Vice President FIS Global
Marketing and Corporate Communications 904.438.6278
kim.snider@fisglobal.com
Investors George Mihalos Senior Vice President FIS
Investor Relations 904.438.6119 georgios.mihalos@fisglobal.com
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