2018 was a bumper year for M&A activity resulting in some of the largest payment industry deals to date. But just three months in, 2019 witnesses the two largest payment industry deals in history.
- FIS agrees deal worth $43bn to acquire Worldpay: March 2019
A combined FIS and Worldpay generated revenue of $12.3bn in 2018. And in fiscal, FIS plus Worldpay reported adjusted EBITDA of $4.9bn. The deal represents the largest payment industry deal ever.
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By GlobalData- KKR acquires First Data April 2007
KKR agrees to pay is a multiple of 14 times First Data’s estimated 2007 operating profit. The deal when initially announced is valued at $29bn. It is not just one of the largest payment industry deals. KKR acquiring First Data is the world’s second largest leveraged buyout ever.
The deal is announced only seven months after First Data spins off its money transfer unit Western Union.
- Fiserv agrees $22bn all-stock deal to acquire First Data: January 2019
Fiserv and First Data say that the deal enables them to offer account processing and digital banking solutions. In addition, it will offer card issuer processing and network services; e-commerce; integrated payments; and the Clover cloud-based point-of-sale system.
- First Data spins off Western Union: $18bn, October 2006
According to First Data, the Western Union spin-off enabled it and Western Union to focus on their core competencies. Western Union was originally founded in 1851. It was one of just 11 stocks included in the first Dow Jones Average in 1884.
Largest payment industry deals: Vantiv retains Worldpay brand
- Vantiv agrees deal to acquire Worldpay: $10.4bn, August 2017
US-based card processing firm Vantiv agrees a deal worth $104.bn to buy UK-headquartered processor Worldpay. The combined firm is valued at $28.8 bn. Vantiv shareholders will own 57% of the new company with Worldpay shareholders owning approximately 43%. Notably, Vantiv elects to retain the Worldpay brand for the new firm.
Further down the ranking of the largest payment industry deals lurk some notable transactions. Last June, Scandinavian payments group Nets agreed to merge with German peer Concardis in a transaction worth about $6bn.
Also in 2018, Worldline agreed a $2.75bn deal to buy the payments unit of Swiss exchange operator SIX Group.
And then there is PayPal, responsible for three notable deals in the past six years. Last May, PayPal agreed a $2.2bn deal to acquire loss-making Swedish payments start-up iZettle. The purchase price represented twice the sum iZettle aimed to raise in an IPO.
Other PayPal deals include Braintree, bought in 2013 for $800m and Xoom acquired for $890m in 2015.
Future possible M&As: players to watch
Attention will inevitably turn to other major players in the sector. It is a lengthy longlist. Adyen will be one of the most keenly watched. Its 2018 annual results, released on 28 February, easily beat analyst forecasts.
In the second half of 2018, Adyen net revenue in North America almost doubled and revenue in Asia Pacific rose by more than 120%. Adyen shares are up by close to 200% since its IPO last June.
Others to watch include Global Payments, Jack Henry, Wirecard and TSYS.
The battle for payment processing dollars in the SME sector and TSYS going head to head with the likes of Square, Poynt and Stripe will also attract much attention.
