- Merger of equals creates the preeminent
technology-enabled payments company with extensive scale and
unmatched global reach
- Combined company will have market
leading positions in integrated payments, owned software in both
merchant and issuing, increased scale in ecommerce and omnichannel
solutions and further exposure to faster growth geographies and
digital payment trends
- Significantly enhances financial
strength and flexibility with expected pro forma adjusted net
revenues plus network fees1 of approximately $8.6 billion, adjusted
EBITDA of approximately $3.5 billion and approximately $2.5 billion
of adjusted free cash flow with expected investment grade credit
ratings
- Compelling value creation with
immediate projected adjusted earnings per share accretion of
mid-single digits in 2020 and low double digits thereafter on an
operating basis
- Jeff Sloan will be named Chief
Executive Officer of the combined company and Troy Woods will
become Chairman of the Board of Directors upon closing
Global Payments (NYSE:GPN), a leading worldwide provider of
payment technology and software solutions, and TSYS (NYSE:TSS), a
leading global payments provider offering innovative solutions
across the issuing, merchant and consumer segments, announced today
that they have entered into a definitive agreement to combine in an
all-stock merger of equals.
This press release features multimedia. View
the full release here:
https://www.businesswire.com/news/home/20190528005198/en/
The transaction creates the premier payments technology company
at scale in the largest and most attractive financial technology
markets worldwide. Combined, Global Payments and TSYS will provide
cutting edge payments and software solutions to approximately 3.5
million predominantly small to mid-sized (SMB) merchant locations
and more than 1,300 financial institutions across more than 100
countries. TSYS will also substantially expand Global Payments’
ecommerce and omnichannel solutions presence in the United States
and provide further opportunities for meaningful multinational
omnichannel market share gains. Finally, Global Payments will have
exposure to some of the fastest growing digital payments trends
through TSYS’ issuer and consumer solutions businesses.
“The combination of Global Payments and TSYS establishes the
leading pure play payments technology company with unparalleled
vertical market and payment software capabilities and ecommerce and
omnichannel solutions, operating at scale in fast growing markets
globally,” said Jeff Sloan, Chief Executive Officer of Global
Payments. “This transformative partnership accelerates our
technology-enabled, software-driven payments strategy and provides
exposure into attractive and complementary businesses, while
enhancing our financial strength and flexibility.” Sloan continued,
“We could not be more excited about the future as we bring together
two industry leaders with strong businesses and cultures that will
generate significant opportunities for our employees, customers,
partners and shareholders worldwide.”
“In this exciting merger of equals, our new company will truly
be a payments powerhouse that is perfectly poised to lead the
industry in delivering merchant, issuer and consumer payments
technology, solutions and service to our customers,” said M. Troy
Woods, Chairman, President and Chief Executive Officer of TSYS.
“Our companies share common values, a strong culture of putting
people first, and a relentless commitment to doing the right thing,
making this combination the perfect fit. The entire TSYS team is
proud to link arms with Global Payments, and we look forward to
leading the market as the preeminent payment solutions
provider.”
William I Jacobs, Chairman of Global Payments, said "It has been
my honor to serve as Lead Director and then Chairman of Global
Payments since its IPO in 2001. I am delighted with the agreed
partnership with TSYS, which I believe combines the two best
payments technology companies worldwide. Their future is very
bright, and I look forward to continuing to contribute to their
board."
The combined company is expected to have investment grade credit
ratings immediately on closing based on its strong financial
profile and free cash flow generation. Global Payments will
maintain a disciplined, long-term focused capital allocation
strategy that balances re-investment in the business and returns to
shareholders, while maintaining an investment grade balance sheet
and ensuring ample liquidity and financial flexibility.
Compelling Strategic Rationale and Financial Benefits
Diversified Payments Technology Company at
Scale: The combination creates a leading provider of
distinctive technology-enabled payments solutions and services with
significant exposure to the most attractive vertical markets and
fastest growth geographies. Upon closing, Global Payments will
process in excess of 50 billion transactions annually in 38
countries physically and over 100 countries virtually, and serve
nearly 3.5 million predominantly SMB merchant locations globally,
with an unmatched salesforce of over 3,500 sales and sales support
professionals worldwide.
Targeting the Most Attractive End Markets
in Payments: Global Payments and TSYS will have a leading
position in integrated payments as TSYS’ exposure to 50 plus
vertical markets are highly complementary with OpenEdge’s presence
in 70 plus vertical markets today. TSYS’ ecommerce and omnichannel
business in the United States will substantially enhance Global
Payments’ existing domestic business and provide numerous
additional multinational opportunities for cross-sell
internationally. The combined company will also benefit from TSYS’
payment facilitation technologies. In addition, Global Payments’
extensive acquiring operations in 31 countries outside the United
States will enable significant cross-sell opportunities for TSYS’
issuer solutions business internationally, providing additional
access to faster growth markets. Finally, TSYS’ consumer and issuer
solutions businesses provide exposure to developing
business-to-business as well as person-to-person digital payment
trends, two segments in which Global Payments does not currently
compete, providing a new avenue for growth.
Extending Leadership in Software:
The combination of Global Payments and TSYS will create one of the
largest software companies in the United States with an emphasis on
payments. Over 6,000 of the company’s employees will be dedicated
to developing market leading technologies. Global Payments expects
to accelerate TSYS’ modernization efforts and legacy of innovation
in card issuing, as TSYS continues to focus on a product driven
strategy as it moves increasingly towards more cloud-based
functionality.
Combining Similar Cultures: Global
Payments and TSYS are very proud of their strong, complementary
corporate cultures developed over many years. For each company, our
colleagues come first, and our employees are the most important
contributors to our success. We will take the best of both of our
cultures going forward and preserve and enhance our commitments to
the communities in which we live and work. On a combined basis, the
company will invest significantly in training and development to
provide further opportunities for current and future
colleagues.
Enhanced Financial Profile and
Flexibility: The combined company is expected to generate
approximately $8.6 billion in annual adjusted net revenue plus
network fees2 and approximately $3.5 billion in adjusted EBITDA on
a pro forma basis for 2019, inclusive of run-rate revenue and
expense synergies.
The pro forma financial profile, including industry leading
organic growth and strong free cash flow generation, will provide
flexibility to invest in innovation, pursue strategic acquisitions,
and return capital to shareholders. Global Payments will be well
capitalized with a pro forma leverage ratio of approximately 2.5x
at close and is committed to maintaining leverage at this level to
support its expected investment grade credit ratings going forward.
In addition, the combined company intends to preserve the existing
TSYS dividend yield.
Significant Value Creation for
Shareholders: The transaction is expected to be mid-single
digits accretive to adjusted earnings per share in 2020 and low
double digits accretive thereafter on an operating basis. The
combination is expected to deliver at least $300 million of annual
run-rate cost synergies primarily through combining business
operations, aligning go-to-market strategies, streamlining
technology infrastructure, eliminating duplicative corporate and
operational structures, and scale efficiencies. Additionally,
annual run-rate revenue synergies are expected to be at least $100
million, primarily from significant opportunities to cross-sell
complementary technology solutions through the combined direct
distribution network. These synergies are expected to be realized
within three years.
Transaction Details
Under the terms of the merger agreement, TSYS shareholders will
receive 0.8101 Global Payments shares for each share of TSYS common
stock, representing an equity value for TSYS of approximately $21.5
billion. This reflects a price per share of $119.86 for each share
of TSYS common stock, and an approximately 20% premium to TSYS’
unaffected common share price as of the close of business on May
23, 2019.
Upon closing, Global Payments shareholders will own 52% of the
combined company, and TSYS shareholders will own 48% on a fully
diluted basis. The merger agreement has been unanimously approved
by each company's Board of Directors.
Governance and Leadership
Upon closing, the Board of Directors of the combined company
will consist of 12 members, 6 of whom will be from the Board of
Directors of Global Payments and 6 of whom will be from the Board
of Directors of TSYS. Troy Woods will become Chairman of the Board
of Directors and Jeff Sloan will serve as Chief Executive Officer
of the combined company and a Board member. Cameron Bready will
become President and Chief Operating Officer of the combined
company and Paul Todd will become Chief Financial Officer.
The executive leadership team will be comprised equally of
individuals from Global Payments and TSYS with a demonstrated track
record of leadership and innovation in payments and significant
expertise in driving value creation.
The combined company will be named Global Payments and will have
dual headquarters in Atlanta and Columbus, Georgia. Global Payments
will conduct its issuer solutions business under the TSYS name, and
NetSpend will continue to be the go-to-market name for the consumer
solutions business.
Timing and Approvals
The transaction, which is expected to close in the fourth
quarter of 2019, is subject to the receipt of required regulatory
approvals and other customary closing conditions and the approval
of shareholders of both companies. The transaction is not subject
to any financing conditions.
Advisors
BofA Merrill Lynch and J.P. Morgan Securities LLC are serving as
financial advisors to Global Payments and have provided committed
financing. Wachtell, Lipton, Rosen & Katz is serving as legal
advisor to Global Payments.
Goldman, Sachs & Co. LLC and Greenhill & Co. are serving
as financial advisors to TSYS. King & Spalding LLP is serving
as legal advisor to TSYS.
Conference Call and Webcast
Global Payments and TSYS will host a conference call today, May
28, 2019 at 8:00 a.m. ET to discuss the transaction. Callers may
access the conference call via the investor relations page of each
company’s website at www.globalpaymentsinc.com and www.tsys.com; or
callers in North America may dial 877-674-6428 and callers outside
North America may dial 970-315-0457. A replay of the call will be
archived on the companies’ websites within two hours of the live
call.
About Global Payments
Global Payments Inc. (NYSE: GPN) is a leading worldwide provider
of payment technology and software solutions delivering innovative
services to our customers globally. Our technologies, services and
employee expertise enable us to provide a broad range of solutions
that allow our customers to accept all payment types and operate
their businesses more efficiently across a variety of distribution
channels in many markets around the world.
Headquartered in Atlanta, Georgia with approximately 11,000
employees worldwide, Global Payments is a member of the S&P 500
with customers and partners in 32 countries throughout North
America, Europe, the Asia-Pacific region and Brazil. For more
information about Global Payments, our Service. Driven. Commerce
brand and our technologies, please visit
www.globalpaymentsinc.com.
About TSYS
TSYS® (NYSE: TSS) is a leading global payments provider,
offering seamless, secure and innovative solutions across the
payments spectrum — for issuers, merchants and consumers. We
succeed because we put people and their needs at the heart of every
decision to help them unlock payment opportunities. It’s an
approach we call People-Centered Payments®.
Our headquarters are located in Columbus, Ga., U.S.A., with
approximately 13,000 team members and local offices across 13
countries. TSYS generated revenue of $4.0 billion in 2018, while
processing more than 32.3 billion transactions. We are a member of
The Civic 50 and were named one of the 2018 World's Most Ethical
Companies by Ethisphere magazine. TSYS is a member of the S&P
500 and routinely posts all important information on its website.
For more, visit tsys.com.
Forward-Looking Statements
Certain of the matters discussed in this communication which are
not statements of historical fact constitute forward-looking
statements within the meaning of the Private Securities Litigation
Reform Act of 1995. These forward-looking statements, which are
based on current expectations, estimates and projections about the
industry and markets in which TSYS and Global Payments operate and
beliefs of and assumptions made by TSYS management and Global
Payments management, involve uncertainties that could significantly
affect the financial condition, results of operations, business
plans and the future performance of TSYS, Global Payments or the
combined company. Words such as “believes,” “anticipates,”
“expects,” “intends,” “targeted,” “estimates,” “forecasts,”
“projects,” “plans,” “may,” “could,” “should,” “would,” and similar
expressions are intended to identify forward-looking statements but
are not the exclusive means of identifying these statements. Such
forward-looking statements include, but are not limited to,
statements about the strategic rationale and financial benefits of
the transaction, including expected future financial and operating
results and the combined company’s plans, objectives, expectations
and intentions. All statements that address operating performance,
events or developments that we expect or anticipate will occur in
the future — including statements relating to projections of
revenue, income or loss, earnings or loss per share, the payment or
nonpayment of dividends, capital structure and other financial
items; statements of plans and objectives of TSYS or Global
Payments or their management or Board of Directors, including those
relating to products or services; and statements of future economic
performance — are forward-looking statements. These statements are
not guarantees of future performance and involve certain risks,
uncertainties and assumptions that are difficult to predict.
Although we believe the expectations reflected in any
forward-looking statements are based on reasonable assumptions, we
can give no assurance that our expectations will be attained, and
therefore actual outcomes and results may differ materially from
what is expressed or forecasted in such forward-looking statements.
In addition to factors previously disclosed in TSYS’ and Global
Payments’ reports filed with the SEC and those identified elsewhere
in this communication, the following factors, among others, could
cause actual results to differ materially from forward-looking
statements or historical performance: the occurrence of any event,
change or other circumstances that could give rise to the right of
one or both of TSYS and Global Payments to terminate the merger
agreement; the outcome of any legal proceedings that may be
instituted against TSYS, Global Payments or their respective
directors; the ability to obtain regulatory approvals and meet
other closing conditions to the merger on a timely basis or at all,
including the risk that regulatory approvals required for the
merger are not obtained on a timely basis or at all, or are
obtained subject to conditions that are not anticipated or that
could adversely affect the combined company or the expected
benefits of the transaction; the ability to obtain approval by TSYS
shareholders and Global Payments shareholders on the expected terms
and schedule; difficulties and delays in integrating the TSYS’ and
Global Payments’ businesses, including with respect to implementing
systems to prevent a material security breach of any internal
systems or to successfully manage credit and fraud risks in
business units; failing to fully realize anticipated cost savings
and other anticipated benefits of the merger when expected or at
all; business disruptions from the proposed merger that will harm
TSYS’ or Global Payments’ business, including current plans and
operations; potential adverse reactions or changes to business
relationships resulting from the announcement or completion of the
merger, including as it relates to TSYS’ or Global Payments’
ability to successfully renew existing client contracts on
favorable terms or at all and obtain new clients; failing to comply
with the applicable requirements of Visa, Mastercard or other
payment networks or card schemes or changes in those requirements;
the ability of TSYS or Global Payments to retain and hire key
personnel; the diversion of management’s attention from ongoing
business operations; uncertainty as to the long-term value of the
common stock of Global Payments following the merger, including the
dilution caused by Global Payments’ issuance of additional shares
of its common stock in connection with the transaction; the
continued availability of capital and financing following the
merger; the business, economic and political conditions in the
markets in which TSYS and Global Payments operate; the impact of
new or changes in current laws, regulations, credit card
association rules or other industry standards, including privacy
and cybersecurity laws and regulations; and events beyond TSYS’ or
Global Payments’ control, such as acts of terrorism.
Any forward-looking statements speak only as of the date of this
communication or as of the date they were made, and neither TSYS
nor Global Payments undertakes any obligation to update
forward-looking statements. For a more detailed discussion of these
factors, also see the information under the captions “Risk Factors”
and “Management’s Discussion and Analysis of Financial Condition
and Results of Operations” in TSYS’ and Global Payments’ most
recent annual reports on Form 10-K for the year ended December 31,
2018, quarterly reports on Form 10-Q for the period ended March 31,
2019, and any material updates to these factors contained in any of
TSYS’ and Global Payments’ future filings.
As for the forward-looking statements that relate to future
financial results and other projections, actual results will be
different due to the inherent uncertainties of estimates, forecasts
and projections and may be better or worse than projected and such
differences could be material. Given these uncertainties, you
should not place any reliance on these forward-looking statements.
Annualized, pro forma, projected and estimated numbers are used for
illustrative purpose only, are not forecasts and may not reflect
actual results.
Additional Information and Where to Find It
In connection with the proposed merger, Global Payments will
file with the SEC a registration statement on Form S-4 to register
the shares of Global Payments’ common stock to be issued in
connection with the merger. The registration statement will include
a joint proxy statement/prospectus which will be sent to the
shareholders of TSYS and Global Payments seeking their approval of
their respective transaction-related proposals. INVESTORS AND
SECURITY HOLDERS ARE URGED TO READ THE REGISTRATION STATEMENT ON
FORM S-4 AND THE RELATED JOINT PROXY STATEMENT/PROSPECTUS INCLUDED
WITHIN THE REGISTRATION STATEMENT ON FORM S-4, AS WELL AS ANY
AMENDMENTS OR SUPPLEMENTS TO THOSE DOCUMENTS AND ANY OTHER RELEVANT
DOCUMENTS FILED OR TO BE FILED WITH THE SEC IN CONNECTION WITH THE
PROPOSED MERGER, WHEN THEY BECOME AVAILABLE, BECAUSE THEY DO AND
WILL CONTAIN IMPORTANT INFORMATION ABOUT TSYS, GLOBAL PAYMENTS AND
THE PROPOSED MERGER.
Investors and security holders may obtain copies of these
documents free of charge through the website maintained by the SEC
at www.sec.gov or from TSYS at its website, www.TSYS.com, or from
Global Payments at its website, www.globalpaymentsinc.com.
Documents filed with the SEC by TSYS will be available free of
charge by accessing TSYS’ website at www.TSYS.com under the heading
Investor Relations, or, alternatively, by directing a request by
telephone or mail to TSYS at One TSYS Way, Columbus, Georgia 31901,
and documents filed with the SEC by Global Payments will be
available free of charge by accessing Global Payments’ website at
www.globalpaymentsinc.com under the heading Investor Relations or,
alternatively, by directing a request by telephone or mail to
Global Payments at 3550 Lenox Road, Suite 3000 Atlanta, Georgia
30326, Attention: Investor Relations.
Participants in the Solicitation
TSYS and Global Payments and certain of their respective
directors and executive officers may be deemed to be participants
in the solicitation of proxies from the shareholders of TSYS and
Global Payments in respect of the proposed merger under the rules
of the SEC. Information about Global Payments’ directors and
executive officers is available in Global Payments’ proxy statement
dated March 13, 2019 for its 2019 Annual Meeting of Shareholders.
Information about TSYS’ directors and executive officers is
available in TSYS’ proxy statement dated March 20, 2019 for its
2019 Annual Meeting of Shareholders. Other information regarding
the participants in the proxy solicitation and a description of
their direct and indirect interests, by security holdings or
otherwise, will be contained in the joint proxy
statement/prospectus and other relevant materials to be filed with
the SEC regarding the merger when they become available. Investors
should read the joint proxy statement/prospectus carefully when it
becomes available before making any voting or investment decisions.
You may obtain free copies of these documents from Global Payments
or TSYS using the sources indicated above.
No Offer or Solicitation
This communication shall not constitute an offer to sell or the
solicitation of an offer to buy any securities, nor shall there be
any sale of securities, in any jurisdiction in which such offer,
solicitation or sale would be unlawful prior to registration or
qualification under the securities laws of any such jurisdiction.
No offering of securities shall be made except by means of a
prospectus meeting the requirements of Section 10 of the Securities
Act.
1 Pro forma estimate for 2019 inclusive of $100mm run-rate adj
net revenue synergies at a 50% margin and $300mm of run-rate
expense synergies; TSYS' adj net revenue projection excludes
network fees
2 TSYS' adj net revenue projection excludes network fees
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190528005198/en/
Contacts for Global Payments
Investor Relations:Winnie SmithGlobal Payments
Inc.770-829-8478investor.relations@globalpay.com
Media Relations:Kimberly MannGlobal Payments
Inc.770-829-8755media.relations@globalpay.com
Contacts for TSYS
Investor Relations:Shawn RobertsTotal System Services,
Inc.706-644-6081
Media Relations:Emily EdmondsTotal System Services,
Inc.404-985-5576
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