FIS®, a global leader in financial services technology, announced plans to pursue a tax-free spin-off of its Merchant Solutions business to strengthen its strategic and operational focus, capitalize on growth opportunities and unlock shareholder value. The two companies expect to maintain a strong commercial relationship, preserving a key value proposition for clients of both businesses. FIS expects the spin-off to be completed within the next 12 months.
FIS’ Board and management determined as part of their previously announced and ongoing strategic review that a spin-off of Merchant Solutions, to be named Worldpay, offers the best path to enhance shareholder value, including by:
- Increasing strategic and operational focus to capitalize on growth and margin potential
- Aligning capital allocation and capital structures with long-term growth targets and underlying market needs, including potentially participating in M&A
- Enhancing the ability to align talent with shareholder returns, including through competitive and focused equity compensation programs
Leadership Commentary
“In evaluating a broad range of alternatives as part of our previously announced comprehensive assessment of FIS’ strategy, businesses, operations, and structure, FIS management and the Board concluded that the spin-off of Worldpay will unlock shareholder value by improving both companies’ performance, enhancing client services, and simplifying operational management,” said Jeffrey A. Goldstein, Chairman of the Board. “We are confident that this is the right time for the separation of Worldpay. The pace of disruption in payments is rapidly accelerating, requiring increased investment in growth and a different capital allocation strategy for our Merchant Solutions business. This spin-off will create two industry-leading, publicly traded companies with sharper focus and increased agility, each well positioned to capitalize on the significant value creation opportunities ahead in their respective markets.”
CEO and President Stephanie Ferris said, “I’m confident that today’s announcement advances our goal of optimizing for performance and returns while improving the satisfaction of our clients and colleagues. We will create two more focused, agile companies that can pursue tailored strategies that are aligned with specific long-term growth opportunities. Both companies will be market leaders in their own right, and we believe that, as separate companies with a commercial relationship, we will deliver a superior outcome. Specifically, the separation will enable FIS to target a strong investment grade credit rating, while allowing Worldpay to invest more aggressively for growth. We believe this approach will best position us to drive innovation and deliver the most competitive products and solutions, benefitting our employees, clients, partners and shareholders.”
Worldpay
Upon completion of the proposed spin-off, the Merchant Solutions business will operate as Worldpay, reestablishing and strengthening a brand that remains highly trusted among clients and partners.
Worldpay, the largest global merchant acquirer1 by transactions with $2 trillion in payments volume in 2022, will remain a leading provider of integrated payment technology solutions for eCommerce, enterprise, and small and medium sized businesses (SMB). Worldpay is a leader in cross-border eCommerce, with $4.8 billion of revenue and $2.3 billion of Adjusted EBITDA in 2022. The business’ revenue was comprised of 43% enterprise, 27% SMB, and 30% eCommerce in 2022.
As an independent, publicly traded company, Worldpay is well positioned to benefit from exposure to secular high-growth markets globally, extensive domain expertise and portfolio breadth, strong long-term and marquee client relationships, and global distribution and scale. In addition, with a different capital allocation strategy, Worldpay will be able to pursue more aggressive investment opportunities, including M&A, in order to:
- Expand in eCommerce – expanding geographic coverage and payment optimization
- Strengthen its Enterprise Offerings – leveraging its powerful value proposition to drive next-generation omni-channel experiences and enterprise commerce
- Transform SMB – shifting towards software-led payments while providing integrated software vendors (ISVs) with embedded finance capabilities
FIS announced Charles Drucker has been appointed as a strategic advisor to aid with the spin-off process, effective immediately. The Company also announced today that, if the spin-off is completed as expected, he will serve as CEO of Worldpay. Drucker, a proven value creating CEO who previously served as CEO of Worldpay, brings decades of experience within the financial technology industry and a strong track record of shareholder value-creation.
The remainder of the Worldpay Board of Directors, management team, and headquarters will be announced at a later date. Worldpay and FIS will continue to maintain a commercial relationship to deliver critical capabilities like embedded finance and loyalty through premium payback, with customary commercial agreements in place to ensure continuity for clients.
SOURCE: Businesswire