The deal values Worldpay at far more than the £2 billion it was sold for by Royal Bank of Scotland in 2010 when the bank was forced to dispose of it under EU state aid rules. The deal creates the world’s biggest electronic payments business by market value, linking banks and credit card companies with billions of consumers who are increasingly shunning cash.
Worldpay, formerly Streamline, was set up in 1989 as a subsidiary of National Westminster Bank. Natwest was bought by RBS in 2002 and the payments business was renamed RBS Worldpay. RBS then developed the business through acquisitions in Europe and America.
In 2010 the bank sold RBS Worldpay to Advent and Bain, the private equity firms, for about £2 billion, to comply with EU rules on state aid after its £45.5 billion government bailout during the financial crisis. The private equity firms floated Worldpay five years later at a valuation of about £5 billion. At the start of last year Worldpay was sold to Vantiv for £8 billion, with the combined entity adopting the Worldpay name.
Worldpay, headquartered in Cincinnati, Ohio, processes about 40 billion transactions a year in 126 currencies. It has 3,700 employees around the world and reported revenue of $3.9 billion last year.
Fidelity National Information Services, better known as FIS, was founded in 1968 as Systematics, a financial technology company.
It grew quickly through acquisitions that began in the early 2000s, culminating in its purchase in 2015 of the financial software company Sungard for $9.1 billion. Headquartered in Jacksonville, Florida, FIS, which is valued at $35 billion, is responsible for moving $9 trillion a year through its payment networks. It employs 47,000 people worldwide and reported revenue of $8.4 billion last year.
Gareth Wilson, managing director for global payments at Accenture, the management consultant, said: “This deal is huge for the payments industry. Consolidation in the market looks set to continue in order for payment companies to grow globally at scale and compete with the threat of new entrants.”
The web shopping boom is driving more consumers to electronic payments and growth is likely to continue as more people in developing countries come online.
The electronic payment market will be worth $2.4 trillion by 2023, Boston Consulting, the management consultant, has predicted.
Gary Norcross, 52, chairman and chief executive of FIS, will remain in the same roles at the merged company, which will retain the FIS name. Charles Drucker, 55, executive chairman and chief executive of Worldpay, will be executive vice-chairman of the new FIS.
Mr Norcross said: “Scale matters in our rapidly changing industry.”
FIS shares closed down $0.76, or 0.7 per cent, at $108.12 in New York. Worldpay shares were up by $9.64, or 9.8 per cent, at $108.32.
Shareholders in Worldpay have been offered $11.00 in cash and 0.9287 FIS shares for each Worldpay share, giving a deal cost of about $35 billion excluding debt. This represents a premium of about 14 per cent on Worldpay's value at close of trading on Friday.
Worldpay shareholders will own 47 per cent of the new company and FIS shareholders the remainder if the deal goes through. FIS said that it expects to refinance about $8 billion of Worldpay's debt.
