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FIS selling a majority stake in Worldpay to GTCR

Illustration of two people shaking hands on a giant stack of money.

Illustration: Aïda Amer/Axios

FIS has officially agreed to sell a majority stake in Worldpay to private equity firm GTCR in a deal that values the merchant services business at up to $18.5 billion.

Why it matters: The deal unwinds FIS' 2019 acquisition of Worldpay, but it could foretell more private equity dealmaking in the payments space.

Context: A deal was widely expected after reports emerged that FIS would reverse course on spinning Worldpay off as a publicly traded company and sell to private equity instead.

Details: GTCR will pay FIS about $11.7 billion upfront for a 55% stake in the new privately owned joint venture.

  • The deal values Worldpay itself at $17.5 billion, with an additional $1 billion of consideration contingent on returns realized by GTCR exceeding certain thresholds.
  • The transaction is expected to close by the first quarter of 2024, subject to regulatory approvals and other closing conditions.

Of note: As previously announced, Worldpay’s former executive chairman and CEO Charles Drucker will become CEO once again when the deal closes.

  • He and FIS chief executive Stephanie Ferris — former CFO at Worldpay before the 2019 acquisition — will join the board of the new standalone company.

Between the lines: FIS plans to use the cash proceeds to shore up its balance sheet, pay down debt and return capital to shareholders through share buybacks.

  • Following the close of the deal, FIS’ ownership interest in Worldpay will be reported as income from a minority interest.

What we're watching: In addition to the upfront cash, GTCR has committed up to $1.25 billion to pursue inorganic growth opportunities — i.e., potential M&A in the payments space.

What they're saying

In a conversation with Axios' Dan Primack, GTCR co-CEO Collin Roche says any acquisitions would probably be focused on product, plus perhaps a bit of added geographic coverage.

  • "A lot of the time, you see smaller businesses with innovative products but not the scale to exploit it; we have scale."
  • FIS had previously signaled plans to spin off Worldpay via an IPO, but GTCR has no short-term plans to bring its new portfolio company public.
  • Perhaps most surprising is that GTCR found bank financing, with Roche saying the firm employed a "fairly conversative cap structure" with leverage in the "low to mid 4's on EBITDA."
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