Global Payments Eyes New Verticals with $4.3 Billion Heartland Buy (Dec. 17, 2015)
In a deal that will bring together two major players in the merchant acquirer processing business, Global Payments Inc. has reached an agreement to purchase Heartland Payment Systems Inc. for $4.3 billion. The cash and stock deal is expected to close by the end of May 2016, pending regulatory and shareholder approval. The combined company will serve nearly 2.5 million merchants worldwide and will generate more than $3 billion in annual net revenue, according to the firms.
But acquiring Heartland isn’t just about getting bigger; the deal gives Global Payments access to several verticals in which Heartland has established a strong presence, including fuel retailers, colleges and universities and hospitality. Less than 5 percent of payments volume in Global Payments’ integrated payments division comes from those verticals, CEO David Mangum said in a conference call discussing the acquisition. The companies’ respective geographic footprints also are complementary; Heartland is U.S.-centric, while Global Payments operates in 29 countries and generated 38 percent of its revenue last quarter from outside the U.S. and Canada. The lack of operational overlap will cut duplicative costs and produce synergies worth at least $50 million in Global Payments’ 2017 fiscal year—and $125 million annually after that, the company said.
The deal also represents a major step in Global Payments’ push toward offering its clients integrated payments solutions—business applications such as accounting and CRM that can be combined with processing in a suite of services for merchants. Heartland has built out its loyalty, payroll and gifting capabilities—and Global Payments now will cross-sell those services, the company noted. In early 2014, Global Payments acquired integrated payments specialist PayPros Inc., and the company nabbed another integrated payments provider, Accelerated Payment Technologies, in 2012.