Fidelity National Information Services (FIS) recently completed the sale of a 55.0% ownership stake in its Worldpay Merchant Solution business to private equity firm GTCR for $12.0 billion. This move marks a shift from the initial plan of a tax-free spin-off of Worldpay that was proposed in 2023. The transaction valued Worldpay at $18.5 billion, with FIS receiving over $12.0 billion in net cash proceeds. These funds will be used for debt reduction and share repurchases totaling at least $4.0 billion in 2024. Following the sale, FIS will hold a 45.0% non-controlling equity interest in Worldpay.
After the divestiture, FIS and Worldpay have entered into commercial agreements allowing them to continue using each other’s valuable clients and offer financial technology solutions. FIS’s 45.0% stake in Worldpay Merchant Solution business will be reported under the Equity method investment earnings starting from 1Q24. The deal is expected to benefit both companies by leveraging their strengths and expanding their presence in the financial technology sector.
The decision to sell the majority stake in Worldpay was driven by a strategic pivot to establish two distinct global entities with enhanced adaptability. The transaction was valued at an attractive multiple of 9.8x FY23E adjusted EBITDA, offering a premium over FIS’s trading valuation. With the inclusion of $1.0 billion in contingent consideration, the transaction’s multiple would elevate to ~10.4x, reflecting a further premium. The upfront proceeds will provide flexibility in capital allocation and debt reduction, strengthening FIS’s financial position.
Worldpay, as a global merchant acquirer with $2.0 trillion in payments volume in 2022, stands to benefit from GTCR’s additional funding of up to $1.25 billion and expertise in the FinTech sector. The transaction solidifies a favorable valuation for FIS’s Merchant business and positions Worldpay as a compelling investment opportunity. The partnership with GTCR and ongoing access to FIS’s financial institution clients will support Worldpay’s growth and competitive standing in the market.
Earlier plans to spin off Worldpay were canceled in favor of the sale to GTCR, following a strategic review and recommendations from activist investors. The move was aimed at strengthening FIS’s strategic focus, leveraging growth opportunities, and delivering value to shareholders. The transaction was successfully finalized on January 31, 2024, with FIS retaining a non-controlling interest (45.0%) in Worldpay. The deal marks a significant shift in FIS’s strategic direction and is expected to drive value creation for both companies and their stakeholders.
Fidelity National Information Services (FIS) is a leading provider of technology solutions for financial institutions globally, driving commerce with its financial technology. With over 55,000 employees in 50+ countries, FIS helps clients address critical business challenges and improve customer experiences. Worldpay, on the other hand, is a global leader in payment processing and merchant services, facilitating secure transactions between businesses and consumers worldwide. The company offers innovative payment solutions and value-added services to clients in over 100 countries, driving growth and enhancing customer experiences.
