FIS is selling its majority stake in Worldpay to private equity group GTCR for $18.5 billion.
The payments company announced the sale Thursday (July 6), days after reports that GTCR and Advent International, a buyouts firm, were vying to pick up a majority stake in Worldpay, the merchant services business of FIS.
“This transaction allows FIS to partially monetize our Merchant Solutions business at an attractive valuation and provides certainty for all stakeholders,” FIS CEO and President Stephanie Ferris said in a news release.
“It also allows us to simplify and drive greater focus on delivering innovative, next-generation financial technology and software solutions.”
Worldpay, she added, will become a privately held entity and enjoy GTCR’s expertise and resources, as the firm has committed additional capital to let Worldpay “pursue inorganic growth” in the payments sector.
The deal will see FIS retain a 45% stake in Worldpay, which it acquired in 2019 for $43 billion, the release said.
As part of the deal, FIS and Worldpay will enter into commercial agreements that allow Worldpay ongoing access to FIS products to resell to its clients, “as well as access to FIS’ financial institution clients as it continues to scale its bank channel,” the release said.
At the same time, FIS will keep access to Worldpay’s portfolio of commercial clients to resell its embedded finance offerings.
PYMNTS wrote in February that FIS had begun exploring a tax-free spinoff of its merchants operations after a strategic review the Florida-based company embarked on in 2022 under pressure from hedge funds D.E. Shaw and JANA Partners.
As that report noted, there are a variety of reasons why publicly traded companies could choose to spin off pieces of their business, including unlocking value for shareholders by allowing a subsidiary to be valued and traded separately, resulting in higher market valuations.
A spinoff can also offer tax benefits for the parent company by creating new tax entities that reduce the company’s total tax liability, and let the parent company spend more time focused on its core businesses.
The sale follows last month’s news that FIS had purchased embedded finance startup Bond Financial Technologies, a move that, as PYMNTS noted, offers the company additional banking-as-a-service (BaaS) and embedded finance talent, while also closing a gap in the embedded finance capabilities of FIS and expanding its portfolio of solutions for FinTechs.
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