Global Payments Inc. Seen as Next Big Target for Fintech Merger

(Bloomberg) -- On the heels of two mega-mergers among payment processing companies, investors are asking: Why is this happening and who’s next?

That’s the view of MoffettNathanson analyst Lisa Ellis, who wrote in a report Wednesday that the "why" behind Fiserv Inc.’s planned $22 billion purchase of First Data Corp and Fidelity National Information Services Inc.’s $43 billion acquisition of WorldPay Inc. is simple. Rapid e-commerce growth, the digitization of payments in Europe, Latin America and Asia, and consumer demand for capabilities such as “order ahead” are causing deals to flourish.

As for who’s next? Global Payments Inc. is the big target.

Bloomberg Intelligence analyst David Ritter said the recent merger wave in payments has exhausted the prospect for many more mega-deals, except for TSYS and Global Payments, which he said last month, would be “a nice fit.”

Ellis called that the “obvious, but true” option, considering they’re the two remaining large, independents. Another option would be for Global Payments to combine with U.S. Bancorp’s Elavon, which is the fifth or sixth player in the U.S.

Global Payments could also be a “solid strategic fit” for JPMorgan Chase & Co., or work well with the new Fiserv-FDC or maybe even Square Inc. or Stripe Inc., she said. But the company could also be a buyer, and try and grab a player outside the U.S. such as Worldline or PagSeguro.

Other deals are possible too, Ellis said. PayPal Inc.’s investment in Brazil’s MercadoLibre Inc. was “just the beginning” for the payment processor as “the company is sitting on a pile of cash and needs to expand its global footprint as its core U.S. and UK markets mature.”

And once the Fiserv-First Data deal closes, which is expected in the second half of 2019, Ellis expects the combined company to “be back out on the acquisition hunt quickly” so it can fill the gaps in its global footprint and e-commerce capabilities.

To contact the reporter on this story: Natasha Rausch in New York at nrausch@bloomberg.net

To contact the editors responsible for this story: Catherine Larkin at clarkin4@bloomberg.net, Scott Schnipper

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