A potential merger, joint venture, or partnership may be in the offing for Global Payments Inc. and Total System Services Inc. (TSYS). The two merchant-processing powerhouses have held preliminary discussions about a combination of some sort, according to a report late Thursday by Bloomberg.com.
In addition to traditional merchant processing, both Global Payments and TSYS target integrated payments via software developers. In its most recent earnings report, Global Payments cited North American integrated payments growth as strong. For its part, TSYS has resurrected its Vital brand for the Vital POS service and launched a mobile point-of-sale business with wireless carrier T-Mobile US Inc. called GoPoint. It is also a major provider of processing services for credit card issuers.
If a deal is consummated this year, it would be the third megamerger of 2019 in the payments industry. Core processor Fiserv Inc. announced in January its intent to acquire First Data Corp. for $22 billion, and in March Fiserv competitor Fidelity National Information Services Inc. (FIS) announced a $43-billion deal with Worldpay Inc.
A Global Payments-TSYS relationship would not be surprising, says investment firm Keefe, Bruyette & Woods Inc. in a research note Friday. “Given the two large mergers that have already occurred within the space this year…, we are not surprised that two of the larger players left standing are contemplating their options, including a potential tie-up,” KBW said. “We think there are multiple options that may make sense (merger, JV, partnership) given the assets and strengths of each company (i.e. GPN on the merchant-acquiring side and TSS on the credit card issuer processing side).” GPN and TSS are the stock-exchange symbols for the two companies.
In early trading Friday, Global Payments shares were valued at $152.92, a 5% increase from Thursday’s close of $147.96. The company had a market capitalization of $24 billion, according to Yahoo! Finance. TSYS shares, at $109.61, were up 10% from yesterday’s $99.62 close. Its market cap stood at $19.4 billion. Neither Global Payments nor TSYS responded to a Digital Transactions News inquiry.