Thursday , December 8, 2022

Global Payments Hangs a $4 Billion Price Tag on EVO

The consolidation of the payment-processing business continues apace, driven by economies of scale and the challenges of keeping up with emerging technology.

In the latest deal, which is expected to close in the first quarter of next year, Global Payments Inc. announced last month it will acquire EVO Payments Inc. in a combination that values EVO at $4 billion.

The deal between the two publicly held Atlanta-based companies will also extend Global into yet more overseas markets, particularly in Europe. EVO, a 33-year-old company that serves merchants in such markets as Poland, Germany, Chile, and soon Greece, has for some time relied on Global as a front-end processor for its payments volume.

EVO is the 21st largest U.S.-based payments processor, according to rankings by The Strawhecker Group. Even after excluding its prior acquisitions of Total System Services (TSYS) and Heartland, Global ranks 10th, according to Strawhecker.

From EVO’s standpoint, the deal will bring together complementary technology strengths, the company said. “Joining EVO and Global Payments will unite highly complementary portfolios of technology-enabled products and partnerships to create an even stronger organization serving a broader customer base,” noted chief executive Jim Kelly, in statement.

In the transaction, Global will pay $34 per share for EVO’s outstanding equity, which the companies say represents a 24% premium to EVO’s last closing price before the announcement and a 40% premium to the company’s 60-day average price, as of July 29. The deal remained subject to approval by EVO’s shareholders as of mid-August.

Separately, Global reported $2.28 billion in revenue for the quarter ended June 30, up nearly 7% from the year-ago period. For the first half of the year, revenue totaled $4.44 billion, a 7.5% increase over the same time last year.

“Our second-quarter performance was the best in our history and exceeded our expectations despite incremental challenges throughout the period,” said Jeff Sloan,
Global’s chief executive, in a statement. “Our merchant and issuer businesses both exceeded our targets,”

For its part, EVO reported second-quarter revenue of $137.7 million, a 13% increase. For the first half of the year, revenue totaled $264.6 million, a 16% jump. Revenue from overseas processing increased 33% on a constant-currency basis, to account for 62% of the company’s total revenue.

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