It looks like payment technology company Global Payments is close to an agreement to acquire its industry peer Total System Services in a deal worth about $20 billion in stock. People familiar with the deal—who choose to remain anonymous because the negotiations are still confidential—say the announcement should be expected on Tuesday.
On the heels of this announcement, last week, shares of Total System’s soared, rising nearly breaching an 18 percent boost before settling down a third of those gains. Global Payments stock also saw a bump—of nearly 4 percent—in afternoon trading.
Overall, shares of the Columbus, GA-based Total System Services (TSYS) are up 23 percent on the year, to date. This has given the company a new market capitalization of $17.6 billion. In addition, the Atlanta, GA-based Global Payments has quite an excellent year, trading up 45 percent over the same period. This has led to a market capitalization $23.3 billion.
Should this deal go through, by Tuesday as expected, it would just be the latest in quite a recent flurry of activity within the payment technology infrastructure. For example, Fiserv announced plans to buy payment processing firm First Data, in January, in a $22 billion deal. Then in March, fintech group Fidelity National Information Services made a similar announcement to absorb Worldpay for a reported $35.
Furthermore, this consolidation comes as established financial companies look to more equally compete with new technology firms—like PayPal and Square—who offer more modern technology-driven services. Indeed, VC funding for payments and processing services grew, last year, to $4.4 billion; that is an increase of 46 percent since last year.
So far, neither Global Payments nor Total System Services have been willing to comment. But, again, this might be an adherence to a confidentiality agreement before the official announcement, on Tuesday.
One thing we do know, however, is that the new company plans to refinance after the merger. Apparently, Bank of America will lead this refinancing effort. Furthermore, Bank of America is advising Global Payments on the deal. And, par for course, a spokesperson from Bank of America declined to comment on the matter.