The $43 billion combination of FIS and Worldpay could trigger a wave of M&A. Here are the deals that could be next. (FIS, WP)


Gary Norcross

  • Fidelity National Information Services (FIS) is acquiring Worldpay for a deal valued at $43 billion the two companies announced Monday.
  • The deal is similar to Fiserv’s acquisition of First Data in January 2019, as it involves a financial-technology company (FIS) buying a payment processor (Worldpay). 
  • Traditional players are looking to consolidate power and expand their offerings to fight off competition from newcomers such as Square. 
  • Analysts suggest Jack Henry & Associates, a direct competitor of FIS and Fiserv, is the next logical company to look to make a deal in the space.

Like middle-schoolers at their first dance, financial-technology companies and payment processors are quickly pairing off with each other in hopes of not being the only ones left alone in a space that’s rapidly evolving.

Fidelity National Information Services (FIS) and Worldpay became the second duo to take the plunge with a deal announced Monday by the companies valued at $43 billion. FIS and Worldpay were preceded by rivals Fiserv and First Data, which announced a deal in January 2019 for $22 billion. 

Gary Norcross, the chairman, president, and CEO of FIS, told Business Insider in an interview that customers are more interested in dealing with large, wide-reaching companies during periods of such rapid evolution. 

“We are in a time of unprecedented pace of change, and in order to meet that unprecedented pace of change, you really do need global scale,” Norcross said. “Our customers see a lot of disruptors coming in the industry, and they want to partner with someone that is large enough that can out-innovate or innovate on a scale that is dramatically different than some of the startups.” 

Wall Street analysts have largely viewed the most recent acquisition as a natural progression in the space.

“If you look at it, FIS is one of the biggest competitors to Fiserv. Worldpay is one of the biggest competitors to First Data,” Larry Berlin, a senior vice president who specializes in research at the venture-capital firm First Analysis. “If the first one made sense, then the second one makes sense. And there is always a chance that another one makes sense.”

When asked if Fiserv’s purchase of First Data was motivation to make the deal, Norcross said FIS had considered buying Worldpay for years.  

Read more: Fiserv’s $22 billion deal for First Data is one of the biggest deals in fintech history, and already some on Wall Street are warning of a culture war

An executive at a credit card company who declined to be named compared the deals taking place in the payment processing space to what has recently occurred in media. Traditional powers such as 21st Century Fox and Disney and AT&T and Time Warner have come to agreements in an effort to compete with newer streaming services such as Netflix and Amazon.

The same thing is occurring in payment processing, the executive said, where Jack Dorsey-led Square has continued to pick up market share over the past decade.

“It is generally tied to the fact that people need to cut costs, they need to take action and things are changing rapidly,” the executive said. “So big companies tend to come together in those kinds of times.”

Most analysts who studied the FIS-Worldpay deal are positive or neutral, categorizing it as a strategic move following the Fiserv-First Data deal that gives the company scale. One note from SunTrust Robinson Humphrey raised issue with risk exposure FIS would get to big box retail chains, such as Target or Walmart, through buying a payment processor like Worldpay that deals in that space. 

As far as what company might look to make a deal next, Jack Henry & Associates is viewed by some analysts as the most likely candidate. As a direct competitor of FIS and Fiserv, Jack Henry might feel the need to also strike a deal, Arvind Ramnani, director for equity research analyst for KeyBanc Capital Markets, told Business Insider. 

“They may be the next to go,” he said. “I think there is probably increased pressure for them to get combined with somebody else.”

Another analyst suggested London-based tech giant Finastra would also be interested in combining with others in the space as well. On the payments processing side, the analyst said two large, independent players stood out: Total System Services and Global Payments 

Meanwhile, Ramnani suggested smaller companies, such as digital banking solutions provider Q2, might be appealing to companies like FIS and Fiserv as they look to further build out their offering in specific areas. 

“Now that these guys are building scale, they might go acquire some more specialized, niche capabilities,” Ramani said. 

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