Fidelity National Information Services (FIS) is set to buy Worldpay for about $35 billion to bolster presence electronic payments industry.
The financial technology sector is consolidating fast, with global payments set to reach $3 trillion a year in revenue by 2023 as more people switch from cash to digital payments for online and high street sales, consulting firm McKinsey predicts.
FIS chief executive officer Gary Norcross will lead the combined powerhouse in banking and payments infrastructure. Worldpay chief executive Charles Drucker will be executive vice-chairman.
The FIS deal valuing Worldpay at about $43 billion including debt, comes a little more than a year after U.S. firm Vantiv paid $10.63 billion for the payments firm, which was set up in Britain and spun off from Royal Bank of Scotland in 2010.
In January, US-based Fiserv bought payment processor First Data Corp for $22 billion. Italy’s Nexi plans to list in what could be one of Europe’s biggest initial public offerings (IPOs) this year.
FIS and Worldpay combined will have annual revenue of about $12 billion and adjusted core earnings of about $5 billion.
Worldpay is a major player in card payments, particularly in Britain, while FIS, produces software for banks and asset managers as well as its financial services outsourcing business.
The companies said the deal would result in an organic revenue growth outlook of 6 to 9 percent through 2021, and $700 million of total core earnings savings over three years. They expect $500 million of revenue savings and are aiming to deliver nearly $4.5 billion of free cash flow in three years.
FIS, which has grown through acquisitions, offers software and outsourcing services to banks, asset managers and insurers and in 2015 completed its buy of financial software company SunGard for $9.1 billion.
It had bought Metavante, which provides payment processing services to financial firms, for about $2.9 billion in 2009.
Centerview Partners and Goldman Sachs were financial advisers to FIS, while Willkie Farr & Gallagher LLP served as legal advisers to FIS on the deal.