Global Payments has announced that it will buy Heartland Payments in a deal widely anticipated.
The companies said in a Tuesday (Dec. 15) afternoon release that the definitive agreement carries a $4.3 billion price tag and expands Global Payments’ U.S. operations across small and mid-sized enterprises, with boosts in its client base and vertical reach.
Global Payments said it will combine Heartland’s solutions with its OpenEdge product, with enhanced presence in the 29 countries in which the company already does business via cross-selling opportunities.
As a combined entity, the company will have a reach across 2.5 million merchants globally. The pro forma revenue will be $3 billion annually, drilling down to about $1 billion in annual EBITDA. Global Payments is taking its guidance higher, with high single digit organic growth rates for the top line, and leveraging the deal to take margins higher by at least 75 basis points annually, translating to mid-teens percentage rate growth in the bottom line.
The deal will be done via a cash-and-stock transaction for $100 per share, and existing holders will own roughly 84 percent of the transaction.
[bctt tweet=”The deal will be done via a cash-and-stock transaction for $100 per share.”]
Global Payments said it believes the deal will be accretive to the tune of mid-single digits to cash EPS in the fiscal year 2017 and then accelerate to double digits. The synergies should hit an annual run rate of $125 million, the companies said.
The deal is slated to close in the fourth quarter of this year. Global Payments said that during the second quarter of this year the standalone company saw revenues grow by 5 percent to $518 million, or 12 percent on a constant currency basis. Cash earnings per share were up to $0.76. For the current fiscal year, the company sees continued guidance of 6 to 8 percent in top line growth through the year to $2.1 billion on the top end.