FIS confirms deal to sell majority stake in Worldpay to GTCR for $11.7bn
FIS has signed a definitive agreement with US-based private equity firm GTCR to sell a majority stake in its Worldpay merchant business.
The announcement follows reports from earlier this week that talks were taking place between the two firms.
GTCR will acquire 55% of Worldpay, with FIS set to receive $11.7 billion in upfront net proceeds. FIS will retain a non-controlling 45% ownership interest in the firm, with the company’s board of directors unanimously approving the transaction.
The deal values Worldpay at $18.5 billion, including $1 billion of consideration contingent on the returns realised by GTCR exceeding certain thresholds.
FIS bought Worldpay in 2019 for $43 billion. Earlier this year, it announced a $17.6 billion non-cash goodwill-impairment charge in relation to Worldpay, according to the Wall Street Journal.
The agreement with GTCR is forecast to simplify operations and create a greater management focus for both FIS and Worldpay.
The upfront cash has also created a greater level of capital allocation flexibility for FIS. With this, the company has confirmed its plans to use the sale’s proceeds to pay down debt and return additional capital to shareholders through its existing share repurchase authorisation, as well as for general corporate purposes, while maintaining its investment grade credit rating.
GTCR has committed an additional equity capital investment in Worldpay of up to $1.25 billion as part of the agreement to pursue inorganic growth opportunities.
Reflecting on the transaction, FIS CEO and president, Stephanie Ferris, says it will allow the company to partially monetise its merchant solutions business at “an attractive valuation” while also enabling it to “simplify and drive greater focus” on delivering new financial technology and software solutions.
“At the same time, Worldpay will become a privately held company and benefit from the resources and expertise of GTCR, which has committed additional capital to allow Worldpay to pursue inorganic growth in the rapidly evolving payments space,” she adds.
As previously announced, Charles Drucker will become CEO of Worldpay upon the transaction’s close.
In terms of future ambitions, Collin Roche, co-CEO and managing director of GTCR, cites plans to “build on the company’s culture of innovation, invest in new capabilities and advance its leadership position across channels and geographies”.
FIS has confirmed its intention to enter into commercial agreements with Worldpay to preserve key value propositions for clients of both businesses while minimising the risk of “dis-synergies”.
These agreements will allow Worldpay continued access to FIS products to resell to its clients, as well as access to FIS’ financial institution clients as it continues to scale its bank channel. Similarly, FIS will retain access to Worldpay’s marquee portfolio of commercial clients to resell its embedded finance offerings.
The transaction is expected to close by Q1 2024, subject to regulatory approvals and other customary closing conditions.