Banking and payments processing conglomerate Fidelity National Information Services Inc took a $17.6 billion write-down on its merchant business as it unveiled plans on Monday to spin it off, undoing a $43 billion acquisition that went sour, according to Reuters.
FIS built its merchant business, which processes transactions for companies, on the back of its $43 billion purchase of Worldpay four years ago. New financial technology startups have since eroded its market share and challenged its profitability.
FIS said in the statement it planned to spin off Worldpay in the next 12 months into a separate company that will be owned by its shareholders on a tax-free basis.
“In evaluating a broad range of alternatives as part of our previously announced comprehensive assessment of FIS’ strategy, businesses, operations, and structure, FIS management and the Board concluded that the spin-off of Worldpay will unlock shareholder value by improving both companies’ performance, enhancing client services, and simplifying operational management,” said Jeffrey A. Goldstein, Chairman of the Board. “We are confident that this is the right time for the separation of Worldpay. The pace of disruption in payments is rapidly accelerating, requiring increased investment in growth and a different capital allocation strategy for our Merchant Solutions business. This spin-off will create two industry-leading, publicly traded companies with sharper focus and increased agility, each well positioned to capitalize on the significant value creation opportunities ahead in their respective markets.”
CEO and President Stephanie Ferris said, “We will create two more focused, agile companies that can pursue tailored strategies that are aligned with specific long-term growth opportunities. Both companies will be market leaders in their own right, and we believe that, as separate companies with a commercial relationship, we will deliver a superior outcome. Specifically, the separation will enable FIS to target a strong investment grade credit rating, while allowing Worldpay to invest more aggressively for growth.”
Upon completion of the proposed spin-off, the Merchant Solutions business will operate as Worldpay.
Worldpay, the largest global merchant acquirer1 by transactions with $2 trillion in payments volume in 2022, will remain a leading provider of integrated payment technology solutions for eCommerce, enterprise, and small and medium sized businesses (SMB). Worldpay is a leader in cross-border eCommerce, with $4.8 billion of revenue and $2.3 billion of Adjusted EBITDA in 2022. The business’ revenue was comprised of 43% enterprise, 27% SMB, and 30% eCommerce in 2022.
Following the proposed spin-off, FIS will remain a leading provider of financial technology solutions for financial institutions, capital markets firms, clients and corporates globally. FIS’ Banking and Capital Markets businesses generated $9.5 billion of revenue and $4.2 billion of Adjusted EBITDA in 2022, excluding Corporate and Other.
____________
1 Nilson Report – October 2022
Banking 4.0 – „how was the experience for you”
„So many people are coming here to Bucharest, people that I see and interact on linkedin and now I get the change to meet them in person. It was like being to the Football World Cup but this was the World Cup on linkedin in payments and open banking.”
Many more interesting quotes in the video below:
