FIS sells Worldpay to private equity firm GTCR

Fidelity National Information Services (FIS) is selling a majority stake of its Worldpay Merchant Solutions branch to GTCR - a private equity firm for close to $12 billion. The sale of its 55% stake is at an enterprise value of $18.5 billion.

Worldpay’s sale

About four years ago, FIS acquired WorldPay at a valuation of $43 billion. However, the move did not bear the expected results; an aspect that has led the firm to sell it at less than half the enterprise value it acquired it.

Even so, FIS will still retain a non-controlling stake of 45% in the stand-alone joint venture. The $11.7 billion it will receive from the sale will be used to cater for its down debt while the additional capital will be returned to its shareholders through buybacks.

FIS’s decision to buy Worldpay in 2019 was in line with its strategy of advancing into a major player in payments and back-office financial services. Indeed, Worldpay is one of the biggest payment processors; enabling businesses to accept card payments. Through the deal, both parties envisioned major revenue and cost benefits by cross-selling services to each company’s customers.

However, the vision has not materialized as Worldpay reported a major decline in its profit margins. This is in addition to the low revenue growth. Competition from online and card-based payment companies like Shopify, Square, and Clover has contributed to the stunted growth. Indeed, since the acquisition of Worldpay, FIS’ shares have dropped by over 50% while its market cap is at around $35 billion.

FIS provides data and technology services to financial institutions. Its services and software are used in an array of activities including when consumers check their bank account balances. Moving forward, it will be focusing on the needs of local and global banks. At the same time, Worldpay will have an opportunity to look for suitable investments or acquisitions.