Global Payments (NYSE:GPN), a leading worldwide provider of payment
technology and software solutions, and TSYS (NYSE:TSS), a leading global
payments provider offering innovative solutions across the issuing,
merchant and consumer segments, announced today that they have entered
into a definitive agreement to combine in an all-stock merger of equals.
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The transaction creates the premier payments technology company at scale
in the largest and most attractive financial technology markets
worldwide. Combined, Global Payments and TSYS will provide cutting edge
payments and software solutions to approximately 3.5 million
predominantly small to mid-sized (SMB) merchant locations and more than
1,300 financial institutions across more than 100 countries. TSYS will
also substantially expand Global Payments’ ecommerce and omnichannel
solutions presence in the United States and provide further
opportunities for meaningful multinational omnichannel market share
gains. Finally, Global Payments will have exposure to some of the
fastest growing digital payments trends through TSYS’ issuer and
consumer solutions businesses.
“The combination of Global Payments and TSYS establishes the leading
pure play payments technology company with unparalleled vertical market
and payment software capabilities and ecommerce and omnichannel
solutions, operating at scale in fast growing markets globally,” said
Jeff Sloan, Chief Executive Officer of Global Payments. “This
transformative partnership accelerates our technology-enabled,
software-driven payments strategy and provides exposure into attractive
and complementary businesses, while enhancing our financial strength and
flexibility.” Sloan continued, “We could not be more excited about the
future as we bring together two industry leaders with strong businesses
and cultures that will generate significant opportunities for our
employees, customers, partners and shareholders worldwide.”
“In this exciting merger of equals, our new company will truly be a
payments powerhouse that is perfectly poised to lead the industry in
delivering merchant, issuer and consumer payments technology, solutions
and service to our customers,” said M. Troy Woods, Chairman, President
and Chief Executive Officer of TSYS. “Our companies share common values,
a strong culture of putting people first, and a relentless commitment to
doing the right thing, making this combination the perfect fit. The
entire TSYS team is proud to link arms with Global Payments, and we look
forward to leading the market as the preeminent payment solutions
provider.”
William I Jacobs, Chairman of Global Payments, said “It has been my
honor to serve as Lead Director and then Chairman of Global Payments
since its IPO in 2001. I am delighted with the agreed partnership with
TSYS, which I believe combines the two best payments technology
companies worldwide. Their future is very bright, and I look forward to
continuing to contribute to their board.”
The combined company is expected to have investment grade credit ratings
immediately on closing based on its strong financial profile and free
cash flow generation. Global Payments will maintain a disciplined,
long-term focused capital allocation strategy that balances
re-investment in the business and returns to shareholders, while
maintaining an investment grade balance sheet and ensuring ample
liquidity and financial flexibility.
Compelling Strategic Rationale and Financial Benefits
Diversified Payments Technology Company at Scale:
The combination creates a leading provider of distinctive
technology-enabled payments solutions and services with significant
exposure to the most attractive vertical markets and fastest growth
geographies. Upon closing, Global Payments will process in excess of 50
billion transactions annually in 38 countries physically and over 100
countries virtually, and serve nearly 3.5 million predominantly SMB
merchant locations globally, with an unmatched salesforce of over 3,500
sales and sales support professionals worldwide.
Targeting the Most Attractive End Markets in
Payments: Global Payments and TSYS will have a leading position
in integrated payments as TSYS’ exposure to 50 plus vertical markets are
highly complementary with OpenEdge’s presence in 70 plus vertical
markets today. TSYS’ ecommerce and omnichannel business in the United
States will substantially enhance Global Payments’ existing domestic
business and provide numerous additional multinational opportunities for
cross-sell internationally. The combined company will also benefit from
TSYS’ payment facilitation technologies. In addition, Global Payments’
extensive acquiring operations in 31 countries outside the United States
will enable significant cross-sell opportunities for TSYS’ issuer
solutions business internationally, providing additional access to
faster growth markets. Finally, TSYS’ consumer and issuer solutions
businesses provide exposure to developing business-to-business as well
as person-to-person digital payment trends, two segments in which Global
Payments does not currently compete, providing a new avenue for growth.
Extending Leadership in Software: The
combination of Global Payments and TSYS will create one of the largest
software companies in the United States with an emphasis on payments.
Over 6,000 of the company’s employees will be dedicated to developing
market leading technologies. Global Payments expects to accelerate TSYS’
modernization efforts and legacy of innovation in card issuing, as TSYS
continues to focus on a product driven strategy as it moves increasingly
towards more cloud-based functionality.
Combining Similar Cultures: Global Payments
and TSYS are very proud of their strong, complementary corporate
cultures developed over many years. For each company, our colleagues
come first, and our employees are the most important contributors to our
success. We will take the best of both of our cultures going forward and
preserve and enhance our commitments to the communities in which we live
and work. On a combined basis, the company will invest significantly in
training and development to provide further opportunities for current
and future colleagues.
Enhanced Financial Profile and Flexibility:
The combined company is expected to generate approximately $8.6 billion
in annual adjusted net revenue plus network fees2 and
approximately $3.5 billion in adjusted EBITDA on a pro forma basis for
2019, inclusive of run-rate revenue and expense synergies.
The pro forma financial profile, including industry leading organic
growth and strong free cash flow generation, will provide flexibility to
invest in innovation, pursue strategic acquisitions, and return capital
to shareholders. Global Payments will be well capitalized with a pro
forma leverage ratio of approximately 2.5x at close and is committed to
maintaining leverage at this level to support its expected investment
grade credit ratings going forward. In addition, the combined company
intends to preserve the existing TSYS dividend yield.
Significant Value Creation for Shareholders:
The transaction is expected to be mid-single digits accretive to
adjusted earnings per share in 2020 and low double digits accretive
thereafter on an operating basis. The combination is expected to deliver
at least $300 million of annual run-rate cost synergies primarily
through combining business operations, aligning go-to-market strategies,
streamlining technology infrastructure, eliminating duplicative
corporate and operational structures, and scale efficiencies.
Additionally, annual run-rate revenue synergies are expected to be at
least $100 million, primarily from significant opportunities to
cross-sell complementary technology solutions through the combined
direct distribution network. These synergies are expected to be realized
within three years.
Transaction Details
Under the terms of the merger agreement, TSYS shareholders will receive
0.8101 Global Payments shares for each share of TSYS common stock,
representing an equity value for TSYS of approximately $21.5 billion.
This reflects a price per share of $119.86 for each share of TSYS common
stock, and an approximately 20% premium to TSYS’ unaffected common share
price as of the close of business on May 23, 2019.
Upon closing, Global Payments shareholders will own 52% of the combined
company, and TSYS shareholders will own 48% on a fully diluted basis.
The merger agreement has been unanimously approved by each company’s
Board of Directors.
Governance and Leadership
Upon closing, the Board of Directors of the combined company will
consist of 12 members, 6 of whom will be from the Board of Directors of
Global Payments and 6 of whom will be from the Board of Directors of
TSYS. Troy Woods will become Chairman of the Board of Directors and Jeff
Sloan will serve as Chief Executive Officer of the combined company and
a Board member. Cameron Bready will become President and Chief Operating
Officer of the combined company and Paul Todd will become Chief
Financial Officer.
The executive leadership team will be comprised equally of individuals
from Global Payments and TSYS with a demonstrated track record of
leadership and innovation in payments and significant expertise in
driving value creation.
The combined company will be named Global Payments and will have dual
headquarters in Atlanta and Columbus, Georgia. Global Payments will
conduct its issuer solutions business under the TSYS name, and NetSpend
will continue to be the go-to-market name for the consumer solutions
business.
Timing and Approvals
The transaction, which is expected to close in the fourth quarter of
2019, is subject to the receipt of required regulatory approvals and
other customary closing conditions and the approval of shareholders of
both companies. The transaction is not subject to any financing
conditions.
Advisors
BofA Merrill Lynch and J.P. Morgan Securities LLC are serving as
financial advisors to Global Payments and have provided committed
financing. Wachtell, Lipton, Rosen & Katz is serving as legal advisor to
Global Payments.
Goldman, Sachs & Co. LLC and Greenhill & Co. are serving as financial
advisors to TSYS. King & Spalding LLP is serving as legal advisor to
TSYS.
Conference Call and Webcast
Global Payments and TSYS will host a conference call today, May 28, 2019
at 8:00 a.m. ET to discuss the transaction. Callers may access the
conference call via the investor relations page of each company’s
website at www.globalpaymentsinc.com
and www.tsys.com;
or callers in North America may dial 877-674-6428 and callers outside
North America may dial 970-315-0457. A replay of the call will be
archived on the companies’ websites within two hours of the live call.
About Global Payments
Global Payments Inc. (NYSE: GPN) is a leading worldwide provider of
payment technology and software solutions delivering innovative services
to our customers globally. Our technologies, services and employee
expertise enable us to provide a broad range of solutions that allow our
customers to accept all payment types and operate their businesses more
efficiently across a variety of distribution channels in many markets
around the world.
Headquartered in Atlanta, Georgia with approximately 11,000 employees
worldwide, Global Payments is a member of the S&P 500 with customers and
partners in 32 countries throughout North America, Europe, the
Asia-Pacific region and Brazil. For more information about Global
Payments, our Service. Driven. Commerce brand and our
technologies, please visit www.globalpaymentsinc.com.
About TSYS
TSYS® (NYSE: TSS) is a leading global payments provider, offering
seamless, secure and innovative solutions across the payments spectrum —
for issuers, merchants and consumers. We succeed because we put people
and their needs at the heart of every decision to help them unlock
payment opportunities. It’s an approach we call People-Centered
Payments®.
Our headquarters are located in Columbus, Ga., U.S.A., with
approximately 13,000 team members and local offices across 13 countries.
TSYS generated revenue of $4.0 billion in 2018, while processing more
than 32.3 billion transactions. We are a member of The Civic 50 and were
named one of the 2018 World’s Most Ethical Companies by Ethisphere
magazine. TSYS is a member of the S&P 500 and routinely posts all
important information on its website. For more, visit tsys.com.
Forward-Looking Statements
Certain of the matters discussed in this communication which are not
statements of historical fact constitute forward-looking statements
within the meaning of the Private Securities Litigation Reform Act of
1995. These forward-looking statements, which are based on current
expectations, estimates and projections about the industry and markets
in which TSYS and Global Payments operate and beliefs of and assumptions
made by TSYS management and Global Payments management, involve
uncertainties that could significantly affect the financial condition,
results of operations, business plans and the future performance of
TSYS, Global Payments or the combined company. Words such as “believes,”
“anticipates,” “expects,” “intends,” “targeted,” “estimates,”
“forecasts,” “projects,” “plans,” “may,” “could,” “should,” “would,” and
similar expressions are intended to identify forward-looking statements
but are not the exclusive means of identifying these statements. Such
forward-looking statements include, but are not limited to, statements
about the strategic rationale and financial benefits of the transaction,
including expected future financial and operating results and the
combined company’s plans, objectives, expectations and intentions. All
statements that address operating performance, events or developments
that we expect or anticipate will occur in the future — including
statements relating to projections of revenue, income or loss, earnings
or loss per share, the payment or nonpayment of dividends, capital
structure and other financial items; statements of plans and objectives
of TSYS or Global Payments or their management or Board of Directors,
including those relating to products or services; and statements of
future economic performance — are forward-looking statements. These
statements are not guarantees of future performance and involve certain
risks, uncertainties and assumptions that are difficult to predict.
Although we believe the expectations reflected in any forward-looking
statements are based on reasonable assumptions, we can give no assurance
that our expectations will be attained, and therefore actual outcomes
and results may differ materially from what is expressed or forecasted
in such forward-looking statements. In addition to factors previously
disclosed in TSYS’ and Global Payments’ reports filed with the SEC and
those identified elsewhere in this communication, the following factors,
among others, could cause actual results to differ materially from
forward-looking statements or historical performance: the occurrence of
any event, change or other circumstances that could give rise to the
right of one or both of TSYS and Global Payments to terminate the merger
agreement; the outcome of any legal proceedings that may be instituted
against TSYS, Global Payments or their respective directors; the ability
to obtain regulatory approvals and meet other closing conditions to the
merger on a timely basis or at all, including the risk that regulatory
approvals required for the merger are not obtained on a timely basis or
at all, or are obtained subject to conditions that are not anticipated
or that could adversely affect the combined company or the expected
benefits of the transaction; the ability to obtain approval by TSYS
shareholders and Global Payments shareholders on the expected terms and
schedule; difficulties and delays in integrating the TSYS’ and Global
Payments’ businesses, including with respect to implementing systems to
prevent a material security breach of any internal systems or to
successfully manage credit and fraud risks in business units; failing to
fully realize anticipated cost savings and other anticipated benefits of
the merger when expected or at all; business disruptions from the
proposed merger that will harm TSYS’ or Global Payments’ business,
including current plans and operations; potential adverse reactions or
changes to business relationships resulting from the announcement or
completion of the merger, including as it relates to TSYS’ or Global
Payments’ ability to successfully renew existing client contracts on
favorable terms or at all and obtain new clients; failing to comply with
the applicable requirements of Visa, Mastercard or other payment
networks or card schemes or changes in those requirements; the ability
of TSYS or Global Payments to retain and hire key personnel; the
diversion of management’s attention from ongoing business operations;
uncertainty as to the long-term value of the common stock of Global
Payments following the merger, including the dilution caused by Global
Payments’ issuance of additional shares of its common stock in
connection with the transaction; the continued availability of capital
and financing following the merger; the business, economic and political
conditions in the markets in which TSYS and Global Payments operate; the
impact of new or changes in current laws, regulations, credit card
association rules or other industry standards, including privacy and
cybersecurity laws and regulations; and events beyond TSYS’ or Global
Payments’ control, such as acts of terrorism.
Any forward-looking statements speak only as of the date of this
communication or as of the date they were made, and neither TSYS nor
Global Payments undertakes any obligation to update forward-looking
statements. For a more detailed discussion of these factors, also see
the information under the captions “Risk Factors” and “Management’s
Discussion and Analysis of Financial Condition and Results of
Operations” in TSYS’ and Global Payments’ most recent annual reports on
Form 10-K for the year ended December 31, 2018, quarterly reports on
Form 10-Q for the period ended March 31, 2019, and any material updates
to these factors contained in any of TSYS’ and Global Payments’ future
filings.
As for the forward-looking statements that relate to future financial
results and other projections, actual results will be different due to
the inherent uncertainties of estimates, forecasts and projections and
may be better or worse than projected and such differences could be
material. Given these uncertainties, you should not place any reliance
on these forward-looking statements. Annualized, pro forma, projected
and estimated numbers are used for illustrative purpose only, are not
forecasts and may not reflect actual results.
Additional Information and Where to Find It
In connection with the proposed merger, Global Payments will file with
the SEC a registration statement on Form S-4 to register the shares of
Global Payments’ common stock to be issued in connection with the
merger. The registration statement will include a joint proxy
statement/prospectus which will be sent to the shareholders of TSYS and
Global Payments seeking their approval of their respective
transaction-related proposals. INVESTORS AND SECURITY HOLDERS ARE URGED
TO READ THE REGISTRATION STATEMENT ON FORM S-4 AND THE RELATED JOINT
PROXY STATEMENT/PROSPECTUS INCLUDED WITHIN THE REGISTRATION STATEMENT ON
FORM S-4, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THOSE DOCUMENTS
AND ANY OTHER RELEVANT DOCUMENTS FILED OR TO BE FILED WITH THE SEC IN
CONNECTION WITH THE PROPOSED MERGER, WHEN THEY BECOME AVAILABLE, BECAUSE
THEY DO AND WILL CONTAIN IMPORTANT INFORMATION ABOUT TSYS, GLOBAL
PAYMENTS AND THE PROPOSED MERGER.
Investors and security holders may obtain copies of these documents free
of charge through the website maintained by the SEC at www.sec.gov
or from TSYS at its website, www.TSYS.com,
or from Global Payments at its website, www.globalpaymentsinc.com.
Documents filed with the SEC by TSYS will be available free of charge by
accessing TSYS’ website at www.TSYS.com
under the heading Investor Relations, or, alternatively, by directing a
request by telephone or mail to TSYS at One TSYS Way, Columbus, Georgia
31901, and documents filed with the SEC by Global Payments will be
available free of charge by accessing Global Payments’ website at www.globalpaymentsinc.com
under the heading Investor Relations or, alternatively, by directing a
request by telephone or mail to Global Payments at 3550 Lenox Road,
Suite 3000 Atlanta, Georgia 30326, Attention: Investor Relations.
Participants in the Solicitation
TSYS and Global Payments and certain of their respective directors and
executive officers may be deemed to be participants in the solicitation
of proxies from the shareholders of TSYS and Global Payments in respect
of the proposed merger under the rules of the SEC. Information about
Global Payments’ directors and executive officers is available in Global
Payments’ proxy statement dated March 13, 2019 for its 2019 Annual
Meeting of Shareholders. Information about TSYS’ directors and executive
officers is available in TSYS’ proxy statement dated March 20, 2019 for
its 2019 Annual Meeting of Shareholders. Other information regarding the
participants in the proxy solicitation and a description of their direct
and indirect interests, by security holdings or otherwise, will be
contained in the joint proxy statement/prospectus and other relevant
materials to be filed with the SEC regarding the merger when they become
available. Investors should read the joint proxy statement/prospectus
carefully when it becomes available before making any voting or
investment decisions. You may obtain free copies of these documents from
Global Payments or TSYS using the sources indicated above.
No Offer or Solicitation
This communication shall not constitute an offer to sell or the
solicitation of an offer to buy any securities, nor shall there be any
sale of securities, in any jurisdiction in which such offer,
solicitation or sale would be unlawful prior to registration or
qualification under the securities laws of any such jurisdiction. No
offering of securities shall be made except by means of a prospectus
meeting the requirements of Section 10 of the Securities Act.
1 Pro forma estimate for 2019 inclusive of $100mm run-rate
adj net revenue synergies at a 50% margin and $300mm of run-rate expense
synergies; TSYS’ adj net revenue projection excludes network fees
2 TSYS’ adj net revenue projection excludes network fees
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