Investing.com -- Fidelity National Information Services (NYSE:FIS) says it has agreed to sell a majority stake in its Worldpay business to private equity funds managed by GTCR in a deal that values the merchant payments unit at up to $18.5 billion.
Florida-based FIS will receive $11.7B in cash and retain a non-controlling 45% ownership in Worldpay. The funds will be used to pay down debt and return additional capital to stockholders, FIS added.
“This transaction allows FIS to partially monetize our Merchant Solutions business at an attractive valuation and provides certainty for all stakeholders,” said FIS chief executive and president Stephanie Ferris in a statement. “It also allows us to simplify and drive greater focus on delivering innovative, next-generation financial technology and software solutions.”
GTCR's $17.5B upfront valuation of Worldpay equates to a 9.8 times multiple on its expected fiscal 2023 adjusted core earnings, FIS noted. An additional $1B could be tacked on to the valuation depending on the returns realized by GTCR.
Collin Roche, co-chief executive and managing director at Chicago-based GTCR, said the group was confident that Worldpay would see “sustained, long-term growth.”
The board of FIS unanimously approved the deal, which is now expected to close in the first quarter of 2024.
The sale will largely unwind FIS' purchase of Worldpay in 2019 for more than $30B, a move that created global payments and back-office services behemoth that aimed to cater to customers eager to make purchases online. However, a pandemic-driven change in payment trends weighed on Worldpay's performance.
FIS stated earlier this year that it was considering spinning off Worldpay into a separate entity, arguing that this would help facilitate stronger performance and boost its investment credit rating.
Shares in FIS dipped in early trading on Thursday, tracking broader market declines. It had jumped on Monday after the Financial Times reported that FIS was in talks over Worldpay with GTCR and buyout group Advent International.