The plans to spin off its merchant payments business follows shareholder pushback against the company’s structure.
13 February 2023 - 18:39
byAnirban Chakroborti and Niket Nishant
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A customer holds a contactless debit card issued by HSBC Holdings bank near a Worldpay payment terminal at a restaurant in London on March 18 2019. Picture: JASON ALDEN/BLOOMBERG
Payments and banking conglomerate FIS forecast 2023 profit below market estimates on Monday and announced plans to spin off its merchant payments business following shareholder pushback against the company’s structure.
Much of the unit consists of Worldpay, a corporate payments processor that Jacksonville, Florida-based FIS bought in a $43bn deal four years ago. Since then, the company’s shares have lost more than half their value as investors became frustrated with how its three main businesses were linked.
FIS shares slipped nearly 14% to $64.95 in early morning trading on Monday as it forecast 2023 profit between $5.70 and $6 per share, much below analysts’ expectations of $6.57 per share, according to Refinitiv IBES data.
“The EPS (earnings per share) outlook for FY23 underscores continued softness in the core businesses,” Jefferies analysts said in a note.
The spin-off, resulting from a strategic review undertaken in December at shareholder D.E. Shaw Group’s behest, is expected to be tax-free and close in the next 12 months.
“Separation from FIS will allow Worldpay to pursue a more growth-orientated strategy. Central to the growth strategy is a return to more consistent M&A,” FIS CEO Stephanie Ferris said.
The payments market needs “a lot more M&A” than the banking and capital markets that FIS will cater to after the spin off, Ferris said.
Activist investor Jana Partners had also pushed FIS for a strategic review, one of the sources familiar with the matter told Reuters in December.
“We welcome the decisive actions taken by the company and believe separating the merchant business with Charles Drucker as CEO, increasing savings targets, and aligning compensation with performance are the right steps to unlock shareholder value,” said Scott Ostfeld, managing partner at JANA Partners.
Charles Drucker, the former CEO of Worldpay, will lead the merchants business after it is spun out, FIS said.
Reuters reported on the expected spin-off on Friday.
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
US fintech FIS to spin off Worldpay business
The plans to spin off its merchant payments business follows shareholder pushback against the company’s structure.
Payments and banking conglomerate FIS forecast 2023 profit below market estimates on Monday and announced plans to spin off its merchant payments business following shareholder pushback against the company’s structure.
Much of the unit consists of Worldpay, a corporate payments processor that Jacksonville, Florida-based FIS bought in a $43bn deal four years ago. Since then, the company’s shares have lost more than half their value as investors became frustrated with how its three main businesses were linked.
FIS shares slipped nearly 14% to $64.95 in early morning trading on Monday as it forecast 2023 profit between $5.70 and $6 per share, much below analysts’ expectations of $6.57 per share, according to Refinitiv IBES data.
“The EPS (earnings per share) outlook for FY23 underscores continued softness in the core businesses,” Jefferies analysts said in a note.
The spin-off, resulting from a strategic review undertaken in December at shareholder D.E. Shaw Group’s behest, is expected to be tax-free and close in the next 12 months.
“Separation from FIS will allow Worldpay to pursue a more growth-orientated strategy. Central to the growth strategy is a return to more consistent M&A,” FIS CEO Stephanie Ferris said.
The payments market needs “a lot more M&A” than the banking and capital markets that FIS will cater to after the spin off, Ferris said.
Activist investor Jana Partners had also pushed FIS for a strategic review, one of the sources familiar with the matter told Reuters in December.
“We welcome the decisive actions taken by the company and believe separating the merchant business with Charles Drucker as CEO, increasing savings targets, and aligning compensation with performance are the right steps to unlock shareholder value,” said Scott Ostfeld, managing partner at JANA Partners.
Charles Drucker, the former CEO of Worldpay, will lead the merchants business after it is spun out, FIS said.
Reuters reported on the expected spin-off on Friday.
Reuters
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