American fintech firm Fidelity National Information Services (FIS) is planning to spin off its merchant services business, Reuters has reported citing people privy to the development.
The majority of FIS’s merchant business is made up of Worldpay, which it acquired in 2019 for $43bn.
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As part of the latest move, FIS aims to carry out a tax-free spinoff of the UK-based payment processor, the sources said.
The company will consider any takeover offers for Worldpay, spinoff of which will require months to take place, added the sources.
Following the acquisition of Worldpay, FIS has lost over half of its shares value, which has left the company at a market capitalisation of $45bn.
FIS is struggling hard to compete with its rivals that aim to offer improved and inexpensive services.
The report noted that the company could announce the spinoff plan by next week, revealing the outcomes of a strategic review launched by the firm in December last year after pressure from hedge funds D.E. Shaw and JANA Partners, said the unnamed sources.
FIS refused to give any updates on the matter.
If finalised, the break-up will see FIS continue to carry out its core processing systems business, facilitating transactions among banks and other financial organisations.
The firm will also retain its capital markets division that cater to investment outfits.
Its merchant solutions and banking solutions units account for around 30% and 46%, respectively, of its revenue, while the company’s capital market solutions division contribute to the rest of the revenue.
