Fintech FIS to buy payment firm Worldpay in $43bn merger
Fidelity National Information Services Inc. (FIS), a US-based financial services technology company, has unveiled plans to buy Worldpay Inc. for $34bn in cash and stocks.
The deal represents one of the largest mergers in the fast-growing payments sector and comes as the latest in a wave of consolidations in the payments technology market.
Through the transaction, Florida-based FIS will assume Worldpay’s debt bringing the enterprise value of the deal to $43bn.
FIS’s current shareholders will own around 53% of the combined company, while Worldpay’s investors will hold 47%.
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Commenting on the deal, Gary Norcross, chairman, president and chief executive officer of FIS, said that “scale matters in our rapidly changing industry."
“Upon closing later this year, our two powerhouse organizations will combine forces to offer a customer-driven combination of scale, global presence and the industry’s broadest range of global financial solutions,” he added.
The combined company will retain the name FIS and will be headquartered in Jacksonville, Florida.
The new company expects to see $500 million of revenue synergies, $400 million of run-rate expense synergies and nearly $4.5 billion of free cash flow in three years.
“This combination greatly expands FIS’ capabilities by enhancing its acquiring and payment offerings and significantly increases Worldpay’s distribution footprint, accelerating its entry into new geographies,” the companies said in a statement.
“Upon closing, the combined company will be positioned to offer best-in-class enterprise banking, payments, capital markets, and global eCommerce capabilities empowering financial institutions and businesses worldwide."
Worldpay is a British payment processor that offers services such as card payments, multi-currency processing, online payments and contactless.
On a typical day, it processes over 31 million mobile, online and in-store transactions – around 400 a second.
New FTC Chair Lina Khan to Break Big Tech's Hold on Economy
Formerly a legal activist and academic, Lina Khan is now in control of one of the most powerful jobs in the country. The U.S. Federal Trade Commission, or FTC, ensures that companies don’t artificially raise prices on consumers and that big companies abide by fair trade practices—and Khan has just been confirmed as the commission’s chair.
Right now, the FTC is highly focused on breaking up Big Tech, and Khan is by far one of the most vocal critics of Silicon Valley. Many tech leaders, in fact, see Khan as a threat to the companies they’ve worked decades to build. Ron Knox, a senior researcher at the Institute for Local Self-Reliance, summed it up. ‘Lina understands the vast potential of the FTC to really reshape the economy, de-concentrate markets, and democratise major parts of the economy’.
What Are Khan’s Views on Big Tech?
Good question. Many lawmakers have compared Big Tech to the railroads that crossed the United States in the 19th century—companies so large and powerful that the government eventually passed the nation’s first anti-trust laws. But Khan’s view is a little more complex. In it, she argues that the laws that applied in the past are virtually inapplicable today.
In a 2017 Yale Law Journal article titled ‘Amazon’s Anti-Trust Paradox’, Khan concluded that federal commissions should look at more than just price. In the 1900s, huge railroads could increase prices as much as they wished; today, Google and Facebook are essentially free for their users. But that doesn’t mean they’re engaging in free and fair competition. Despite the price, these companies still undercut their competitors.
For example, consider some of Amazon’s alleged business operations:
- Pricing at a significant loss. Unfair competition.
- Amassing vast stores of market data. Unfair advantage.
- Buying up smaller, potentially competitive companies. Unfair trade practices.
Just like the railroad trusts all those years ago, several Democrats have suggested that Facebook and Google be split up. Instagram, say goodbye to Facebook; YouTube, say goodbye to Google. ‘These firms essentially provide infrastructure to the digital age’, Khan told the BBC. What remains to be seen is what she’ll do about it.
The First Steps…
Currently, the FTC is suing Facebook for its social network monopoly and will soon evaluate Amazon as well. Biden is fully intent on breaking apart the firms that have ruled much of the American public for so long—and he has bipartisan support. So it’s no surprise that tech organisations are riled up.
‘Antitrust populism is inevitably going to become the governmental policy stance’, said Aurelien Portuese, the Director of Anti-Trust and Innovation Policy at the Information Technology and Innovation Foundation. ‘ [It will] cause lasting self-inflicted damage that benefits foreign, less meritorious rivals’.
But in 2021, tech companies may be on the losing side of public sentiment. Both Republicans and Democrats in the Senate have taken a highly aggressive anti-trust approach, and even intense trade and technology competition with China can’t stop lawmakers from investigating Big Tech. The majority, in fact, may agree with Khan’s sentiment: ‘Even when services are good for consumers, they can hurt a whole set of other interests—be it workers, business formation, or democracy at large’.