Banking and payments processing technology firm Fidelity National Information Services (FIS) took a $17.6 billion write-down on its merchant business.
FIS, which built its merchant business on the back of its $43 billion purchase of Worldpay four years ago, unveiled plans to spin it off.
FIS is facing challenges in its profitability as it lost market share to new financial technology startups.
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.
FIS, which has been under pressure to explore strategic options from activist investors D.E. Shaw Group and Jana Partners, also forecast 2023 profit below market estimates on Monday. FIS forecast 2023 profit between $5.70 and $6 per share.
Last year, D.E. Shaw and Jana urged FIS to undertake a review of its operations, pointing to a significant discount in its share price to peers such as Fiserv and Global Payments. Jana also pushed the company to accelerate previously announced changes to its top management, Reuters news report said.
FIS in December named Stephanie Ferris as the new leader of the company, replacing Gary Norcross, who spearheaded the Worldpay acquisition.
Charles Drucker, former CEO of Worldpay, will lead the merchants business after it is spun out, FIS said.
FIS CEO Stephanie Ferris, on a conference call with analysts, said the separation would free up Worldpay to pursue growth strategically through more M&A.
“FIS’ recent issues stem more from operational missteps and that the strategy behind the combination was not necessarily flawed from a long-term perspective,” Morningstar analysts wrote in a note to clients on Monday.