Fintech FIS has signed a definitive agreement to sell a majority stake in its Worldpay Merchant Solutions business to private equity fund managed by GTCR . FIS, a global player in financial services technology, has announced an accelerated plan to create two highly focused global companies by divesting a majority stake in its Worldpay Merchant Solutions business.

The transaction, valued at USD 18.5 billion, involves private equity funds managed by GTCR acquiring the stake. This move aims to maximise shareholder value and provide strategic flexibility. The sale of Worldpay will immediately generate significant proceeds for FIS based on a USD 17.5 billion valuation, equivalent to a 9.8-times multiple on projected fiscal 2023 adjusted EBITDA.

FIS will retain a non-controlling 45% ownership interest in a new joint venture. The transaction has received unanimous approval from FIS's Board of Directors. Separation plan to enhance focus and drive growth for FIS The separation plan will enable FIS and Worldpay to enhance management focus and operational simplicity.

The upfront cash proceeds will provide FIS with capital allocation flexibility, allowing debt reduction, shareholder returns through share repurchases, and support for general corporate purposes. GTCR has committed to investing up to USD 1.25 billion in additional equity capital in Worldpay for pursuing growth opportunities. Executives from FIS, expressed satisfaction with the transaction, emphasising the opportunity to monetise the Merchant Solutions business at an attractive valuation.

This move allows FIS to streamline operations and focus on delivering innovative financial technology and software solutions. Worldpay will benefit from GTCR's resources and expertise, positioning itself as an independent company and facilitating growth in the evolving payments space. Worldpay, as one of the largest global merchant acquirers, will retain its position as a leader in commerce solutions.

Charles Drucker will assume the role of CEO at Worldpay upon completion of the transaction. The partnership between FIS and Worldpay will continue through commercial agreements, ensuring mutual value for their clients and minimising dis-synergies. These agreements will enable Worldpay to access FIS products for resale and provide FIS with access to Worldpay's commercial client portfolio for reselling embedded finance offerings.

The transaction's valuation reflects the strength of Worldpay's market position and growth potential. The separation will bring significant benefits to both FIS and Worldpay, allowing them to focus on their respective areas of expertise and drive future success. FIS will maintain its position as a leading provider of financial technology solutions, leveraging its brand, domain expertise, and global distribution.

Worldpay will have the opportunity to thrive as an independent entity, backed by GTCR's resources and expertise. Transaction details The transaction is expected to be completed by the first quarter of 2024, subject to regulatory approvals and customary closing conditions. The accelerated separation plan represents a significant milestone in the financial services technology industry and sets the stage for continued growth and leadership for both FIS and Worldpay in their respective domains.

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