US-based financial services major Fidelity National Information Services (FIS) has secured an unconditional approval from the European Commission (EC) for its $43bn (£34.38bn) acquisition of payments technology company Worldpay.
Image: The European Commission has unconditionally approved FIS' acquisition of Worldpay. Photo: courtesy of Zinneke/Wikimedia Commons.
The EC approved FIS’ acquisition of Worldpay under the EU Merger Regulation after examining the transaction under the normal merger review procedure.
Worldpay provides merchant acquiring and related payment technology services across the world. On the other hand, FIS provides financial services technology, focused on retail and institutional banking, asset and wealth management, payments, risk and compliance, and outsourcing solutions.
The Commission ruled that the proposed transaction will not result in any competition concerns considering the limited horizontal overlap between the activities of the two companies. The other factor that went in favour of the approval according to the Commission is the lack of anti-competitive vertical effects emerging from the combination of the activities of the two US-based firms.
The two companies signed the cash-cum-stock deal in March 2019 under which Worldpay’s shareholders will be issued 0.9287 FIS shares plus $11.00 (£8.79) in cash for each share they hold.
The total consideration for the transaction includes assumption of Worldpay’s debt, which is expected to be refinanced by the buyer.
Upon completion of the merger, FIS shareholders will own nearly 53% stake in the combined company, while Worldpay’s shareholders will hold the remaining stake of 47%. The combined company will operate as FIS and will be based in Jacksonville, Florida.
FIS took up the transaction to expand its capabilities by enhancing its acquiring and payment offerings. On the other hand, for Worldpay, the merger is expected to boost its distribution presence considerably, thereby accelerating its reach into new regions.
The solutions and services of the two companies are said to be complementary, which are centred on financial institution issuer services, network and merchant services, loyalty and fraud solutions, and others.
Clients of the two firms can expect the merger to help them in accessing a larger portfolio of digital assets to fast track their revenue growth, streamline their operations and boost their customer engagement.
The merger continues to be subject to the required regulatory and shareholder approvals and other customary closing conditions, and is due to be closed in the second half of this year.