Global Systems and Total Systems Services Combination

Global Systems and Total Systems Services Combination

Reporting on the combination

On September 18, 2019, payment megafirms Global Payments and Total System Services TSYS finalized their merger that resulted in a pure-play payments technology enterprise that hand a significant presence in the global market. Also, the merger expanded its horizons in terms of its operations. As a result of the merger, the new collective megafirm will be called Global Payments. It will help more than 1,300 banks and more than 3.5 million merchant locations that are located in more than 100 nations worldwide. According to the administration, the new merger will enhance opportunities for their customers, staff, business partners, shareholders, among many others, on a global scale.

According to Global Payments CEO Jeff Sloan, the combination was industry-defining and dovetailed with their technology-based approach and also fortified its leadership position regarding their integrated payments and general operations, making them attractive to the global market. The two companies have a standard value on prioritizing their customers, and the merger will only serge to make them better. He said that they would leverage their combined cultures to enhance their commitment to service delivery to their customers.

This merger is one of the regular exhibitions of how companies can join forces to become better on various fronts. For instance, through combination will result in an expansion of their operations, thus a more global presence. The same will be that case for their fortunes as they will expand significantly. As a result, its profits will also increase significantly.

Details

Global payment Systems has its headquarters in Georgia, and globally it has more than 24000 staff that are spread in almost all countries. The company provides comprehensive solutions as well as advanced software. It is also an affiliate member of the S&P 500. It trades on the New York Stock Exchange.

This merger cost it $21.5 billion, and it marked the third the payment industry in 2019. According to the detailed issued in early 2019 the every TSYS shareholder was bound to get 0.8101 Global Payments for every share they owned. As a result, the shareholders would own 52 percent of the new merger while their TSYS counterparts will claim ownership of 48percent.

Sloan retained his position as the chief executive officer of the merger. However, Cameron Bready ware appointed to be its new president as well as the chief operating for the company. Paul Todd became its senior executive vice president and also its chief financial officer. Guido Sacchi maintained his position as the senior executive vice president as well as the chief information officer.

This transaction resulted in the formation of a mega-corporation that gives solutions to payment technology as well as software to midsized merchants. According to Total Systems, the all-stock agreement values TSYS or Total System Services to be at $119.86 per share, which is 20 percent more than the $99.62 closing stock price as of May 23. This was before Bloomberg first reported that the negotiations were going on.

Jeff Sloan attributes this merger to the dynamic nature of the industry. He said that the industry was changing at a fast pace, and technological innovations inform all the changes. The company needed to expand its scale of operation, making it ripe for the merger. Also, it was a culmination of a decade long negotiation that was aimed at giving both entities an edge in the face of the competition that characterized the market.

A few months ago, the talks became serious when their competitors made their deals official in a bid for a significantly more significant share of the global market. The world has more than $100bilion merchants that spend on fees that are swiped annually. For instance, Fiserv Inc. revealed a $22bilion acquisition of Data Corp, earlier 2019. Also, Fidelity National Information Systems struck a deal with Worldpay over a $34 billion acquisition.

This transaction is anticipated to generate $300milion in terms of cost-saving. The new entity will also generate $8.6 billion yearly in terms of adjustment revenue inclusive of network fees. The pre-tax earnings are estimated to $3.5 billion. This acquisition would enable the company to invest more in growth under less pressure from the debts and liabilities. Thus, it could concentrate on approaches that could enhance its growth as a mega entity.

This merger was horizontal as it involved companies that are direct competitors that operate in the same industry. They share the same product lines and markets. Heads of both organizations fully understood their strengths and how a combination could benefit them, thus the merger. They expect the merger to forge a firm identity and presence in the global market, thus making both teams win. Being in the same market means that they will combine forces to overcome competition. Also, given that they have economies of scale, they will aim to dominate the market in the foreseeable future. Their competitors have followed suit.