Payments companies Global Payments and Total System Services have reportedly held deal talks, ushering in what could amount to the third huge merger for the industry in 2019 alone.
Bloomberg, citing people familiar with the matter, reported the companies have engaged in early-stage talks which may result in a deal. The two sides have been discussing joint ventures, partnerships, and a merger. Talks could still fall apart given the early nature of them, noted the report. As it stands, Global Payments has a market value of $23.3 billion given its stock has climbed more than 30 percent this year. Total System Services market cap stands at $17.6 billion, with shares appreciating 16 percent since the start of 2019, reported Bloomberg. Shares have been getting lifted as rumors swirled the two companies could be takeover targets or merger partners. That was prompted by two mega deals in the industry so far this year: Fidelity National Services paying $34 billion for Worldpay and Fiserv paying $22 billion to acquire First Data Corp.
With digital payments growing in popularity, payment companies are looking to expand — and thus the mergers. When FIS announced its deal with Worldpay in March, it said it expands its capabilities by enhancing its acquiring and payment offerings.
Once the deal is closed, the combined company will offer enterprise banking, payments, capital markets, and global eCommerce services to financial institutions and businesses around the world. When Fiserv and First Data announced their deal in January, the companies said end users would benefit from a “highly complementary combination” that offers a range of payments and financial services.
For Global Payments and Total System Services, a deal would make sense because they have businesses that are complementary and are focused on different aspects of the payment marketplace. Total System Services plays in the credit card issuers market, where it is the third-biggest payment processor for that segment of the market in the U.S. According to Bloomberg, it services around 40 percent of the U.S. card accounts for Visa and Mastercard. Meanwhile, Global Payments is a merchant acquirer, helping businesses handle their credit and debit card payments. It’s the fifth-largest merchant acquirer in the U.S., noted the report.