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Will Fidelity National (FIS) Divest Majority Stake in Worldpay?
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Fidelity National Information Services, Inc.’s (FIS - Free Report) Worldpay business has garnered acquisition interests from private equity groups, per Financial Times. The private entities are looking for an opportunity to purchase a majority stake in the Worldpay unit.
Per the report, a potential bid might put a valuation of more than $15 billion for the unit. The entities looking to offer a suitable bid include the private equity investor, Advent, which was part of a consortium that owned the payments provider business earlier. The Chicago-based private equity company, GTCR, is also expected to be on the list of potential buyers.
This February, Fidelity National announced that it was planning to spin off its Merchant Solutions business, which includes the Worldpay business. FIS stated that the tax-free spin-off would create more value for shareholders. The Merchant Solutions unit contributed 32.9% to revenues last year. Fidelity National bought Worldpay in 2019 through a deal valued at around $43 billion, including debt.
The idea of a spin-off surfaced during an assessment of Fidelity National’s business, operations, strategy and structure. FIS expects the move to improve both the companies’ performances and simplify operations. The company plans to maintain a commercial relationship following the move.
In the first quarter, Merchant Solutions’ revenues were recorded at $1,105 million, which dropped 1% year over year. However, organic revenue growth came in at 2%. The adjusted EBITDA margin deteriorated 350 bps year over year to 43.5% in the first quarter due to a lower-margin revenue mix. Following the separation, the unit is likely to be named Worldpay.
Price Performance
Shares of Fidelity have rallied 3.3% in the past three months compared with the 5.1% rise of the industry.
Headquartered in San Francisco, Visa is a global payments technology giant. The Zacks Consensus Estimate for Visa’s current-year earnings indicates a 14.4% year-over-year increase.
London-based Paysafe is a digital commerce solutions provider for different businesses. The Zacks Consensus Estimate for PSFE’s 2023 earnings has improved more than 240% in the past 60 days.
Based in Seattle, WA, Remitly Global is a digital financial services provider. The Zacks Consensus Estimate for RELY’s 2023 earnings suggests 7.4% year-over-year growth.
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Will Fidelity National (FIS) Divest Majority Stake in Worldpay?
Fidelity National Information Services, Inc.’s (FIS - Free Report) Worldpay business has garnered acquisition interests from private equity groups, per Financial Times. The private entities are looking for an opportunity to purchase a majority stake in the Worldpay unit.
Per the report, a potential bid might put a valuation of more than $15 billion for the unit. The entities looking to offer a suitable bid include the private equity investor, Advent, which was part of a consortium that owned the payments provider business earlier. The Chicago-based private equity company, GTCR, is also expected to be on the list of potential buyers.
This February, Fidelity National announced that it was planning to spin off its Merchant Solutions business, which includes the Worldpay business. FIS stated that the tax-free spin-off would create more value for shareholders. The Merchant Solutions unit contributed 32.9% to revenues last year. Fidelity National bought Worldpay in 2019 through a deal valued at around $43 billion, including debt.
The idea of a spin-off surfaced during an assessment of Fidelity National’s business, operations, strategy and structure. FIS expects the move to improve both the companies’ performances and simplify operations. The company plans to maintain a commercial relationship following the move.
In the first quarter, Merchant Solutions’ revenues were recorded at $1,105 million, which dropped 1% year over year. However, organic revenue growth came in at 2%. The adjusted EBITDA margin deteriorated 350 bps year over year to 43.5% in the first quarter due to a lower-margin revenue mix. Following the separation, the unit is likely to be named Worldpay.
Price Performance
Shares of Fidelity have rallied 3.3% in the past three months compared with the 5.1% rise of the industry.
Image Source: Zacks Investment Research
Zacks Rank & Key Picks
Fidelity currently has a Zacks Rank #3 (Hold). Some better-ranked stocks in the broader Business Services space are Visa Inc. (V - Free Report) , Paysafe Limited (PSFE - Free Report) and Remitly Global, Inc. (RELY - Free Report) , each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Headquartered in San Francisco, Visa is a global payments technology giant. The Zacks Consensus Estimate for Visa’s current-year earnings indicates a 14.4% year-over-year increase.
London-based Paysafe is a digital commerce solutions provider for different businesses. The Zacks Consensus Estimate for PSFE’s 2023 earnings has improved more than 240% in the past 60 days.
Based in Seattle, WA, Remitly Global is a digital financial services provider. The Zacks Consensus Estimate for RELY’s 2023 earnings suggests 7.4% year-over-year growth.