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Company: Global Payments Inc (GPN)
Business: Global Payments is simply a payments exertion institution delivering bundle and services to its customers globally. Through its Merchant Solutions segment, it provides payments exertion and bundle solutions globally to small-and-medium sized businesses and prime mid-market and endeavor customers. It offers authorization, colony and backing services, lawsuit support, chargeback resolution, reconciliation and quality absorption services, terminal rental, income and deployment, outgo information services, consolidated billing and reporting. It offers an array of concern absorption bundle solutions that streamline concern operations to customers successful galore vertical markets. Through its Issuer Solutions segment, it provides fiscal institutions and retailers technologies to negociate their paper portfolios. It provides flexible commercialized payments, accounts payable and physics outgo alternate solutions that enactment B2B outgo processes for businesses and governments.
Stock Market Value: $19.98B ($81.93 per share)
Global Payments successful 2025
Activist: Elliott Investment Management
Ownership: n/a
Average Cost: n/a
Activist Commentary: Elliott is simply a precise palmy and astute activistic investor. The firm's squad includes analysts from starring tech backstage equity firms, engineers, operating partners – erstwhile exertion CEOs and COOs. When evaluating an investment, the steadfast besides hires specialty and wide absorption consultants, adept outgo analysts and manufacture specialists. Elliott often watches companies for galore years earlier investing and has an extended unchangeable of awesome committee candidates. The steadfast has historically focused connected strategical activism successful the exertion assemblage and has been precise palmy with that strategy. However, implicit the past respective years its activism radical has grown, and Elliott has been doing a batch much governance-oriented activism and creating worth from a committee level astatine a overmuch larger breadth of companies.
What's happening
Elliott has taken a position successful Global Payments.
Behind the scenes
Global Payments is simply a starring supplier of outgo processing and bundle solutions, focused connected serving tiny and medium-sized merchants and prime mid-market and endeavor customers. The institution operates done 2 segments: Merchant Solutions and Issuer Solutions. Merchant Solutions, contributing astir three-fourths of full sales, provides outgo solutions to alteration customers to judge card, check, and integer payments, offering authorization, settlement, backing and different services. Simply put, Global Payments, arsenic a merchant acquirer, acts arsenic a middleman betwixt the merchant and paper web to authorize and facilitate transactions. Through its Issuer Solutions segment, Global Payments provides broad commerce solutions supporting the outgo ecosystem for issuers done offerings similar halfway processing, endeavor tokenization and more. This conception was formed successful 2019 pursuing the combination of Global Payments and Total System Services ("TSYS") successful an all-stock merger of equals to make a starring payments institution with a beingness successful some merchant acquiring and issuer services.
Peaking successful 2021 astatine astir $220 per stock and an endeavor worth to net earlier interest, taxes, depreciation and amortization (EV/EBITDA) aggregate of astir 25-times, the institution contiguous trades astir $80 per stock and astatine a precocious single-digit multiple. The institution managed to tread h2o during the pandemic contempt the planetary slowdown successful transactions and its absorption connected tiny and mean enterprises. However, income maturation has slowed importantly since 2020, present beneath the halfway acquiring market's high-single maturation rate, implying marketplace stock nonaccomplishment to disruptors similar Stripe, Fiserv's Clover, Shopify and others. That is each precise interesting, but not what this activistic run is about. This is astir a institution that made a poorly received "bet the farm" acquisition and is present astatine an inflection constituent that volition find its future.
On April 17, Global Payments announced that it had agreed to get Worldpay from Fidelity National Information Services (FIS) and backstage equity steadfast GTCR. The three-way cash-and-share acquisition besides progressive Global Payments divesting its Issuer Solutions (previously known arsenic TSYS) concern to FIS successful a woody which valued Worldpay astatine $24.25 cardinal and Issuer Solutions astatine $13.5 billion. Global Payments' shares fell 17% pursuing the announcement for galore bully reasons: (i) this acquisition was announced aft management's commitments astatine their 2024 Investor Day to prosecute accrued shareholder returns, divestments, and, astatine most, tiny bolt-on acquisitions, (ii) absorption has a mediocre way grounds of integrating (or failing to integrate) acquisitions specified arsenic TSYS and AdvancedMD, and (iii) the institution paid excessively overmuch for Worldpay – acquiring it astatine 10.5-times EBITDA versus the 6.5-times aggregate Global Payments trades at. Moreover, investors person grown skeptical of deals of this benignant successful the payments abstraction aft 2 of the 3 largest deals made successful a 2019 question of consolidation person been unwound (Global Payments – TSYS and FIS – Worldpay).
But the bully quality is that nonaccomplishment is priced in. Management thinks the Worldpay transaction makes strategical consciousness for Global Payments, simplifying its concern exemplary into a pure-play commerce solutions provider, and that it volition supply $600 cardinal successful yearly outgo synergies and $200 cardinal successful gross synergies. The marketplace is not believing this oregon has small religion that absorption tin execute these synergies. From wherever the banal trades today, if absorption tin travel anyplace adjacent to achieving these synergies and executing connected this transaction, it volition beryllium a bully instrumentality for stockholders. What this institution needs close present is assistance successful execution and enhanced credibility, and Elliott tin supply both.
There are companies that could usage shareholder practice connected the committee and companies that request it. Global Payments is overmuch person to the latter. A reconstituted committee that holds absorption accountable, commits to an M&A moratorium and adds members with acquisition integrating ample acquisitions volition astir instantly reconstruct capitalist assurance successful the company. Thereafter, the committee tin commencement to de-lever and perchance bargain backmost shares astatine the due clip if Global Payments' banal is inactive importantly undervalued. We would besides expect the committee to bash the astir important happening boards bash – oversee and measure elder management, but we bash not deliberation determination would beryllium immoderate worldly absorption changes up of specified a ample acquisition similar this.
Given the astir cosmopolitan absorption to the Worldpay acquisition and the debased capitalist assurance successful management, we would expect that Elliott volition beryllium capable to locomotion onto this committee with immoderate tenable slate. In a contested concern for the 10-person unitary committee utilizing a cosmopolitan proxy card, Global Payments would astir surely look important defeat. Elliott precocious won 2 of 4 seats astatine Phillips 66 successful a proxy combat with a overmuch higher grade of difficulty. The money made its estimation arsenic an activistic astir 2 decades agone arsenic chiefly a strategical activistic successful exertion companies, making large returns getting companies sold oregon participating successful the acquisition. However, Elliott has since evolved into a overmuch broader and broad activistic successful strategy, assemblage and geography. Today, the steadfast often does its champion activism from the committee level. We judge that a reconstituted committee that includes an Elliott typical volition reconstruct capitalist assurance and summation the probability of a palmy integration of Worldpay.
Ken Squire is the laminitis and president of 13D Monitor, an organization probe work connected shareholder activism, and the laminitis and portfolio manager of the 13D Activist Fund, a communal money that invests successful a portfolio of activistic 13D investments.
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