Fidelity National Information Services (FIS) has announced that it will undertake a tax-free spin-off of its Merchant Solutions business, to be named Worldpay. The separation is intended to enhance the performance of both companies, simplify operational management, and unlock shareholder value. The FIS Board and management determined that the spin-off of Worldpay, which is expected to take place in the next 12 months, would improve capital allocation and capital structures, align talent with shareholder returns, and potentially allow for mergers and acquisitions. The remaining part of FIS will continue to provide financial technology solutions to clients globally.
Worldpay will be the largest global merchant acquirer by transactions with $2tn in payments volume in 2022. It will remain a leading provider of integrated payment technology solutions for e-commerce, enterprise, and small and medium-sized businesses (SMB). The business’s revenue was composed of 43% enterprise, 27% SMB, and 30% e-commerce in 2022. The spin-off is expected to create two industry-leading, publicly traded companies with sharper focus and increased agility, each well-positioned to capitalize on the significant value creation opportunities ahead in their respective markets.
If the spin-off is completed as expected, Charles Drucker, a proven CEO with a strong track record of creating shareholder value, will be the CEO of Worldpay. Drucker previously served as CEO of Worldpay and brings decades of experience within the financial technology industry. The remainder of the Worldpay Board of Directors, management team, and headquarters will be announced at a later date. FIS will continue to maintain a commercial relationship with Worldpay to deliver critical capabilities like embedded finance and loyalty through premium payback, with customary commercial agreements in place to ensure continuity for clients.
Through this transaction, FIS shareholders will receive a pro-rata distribution of shares of Worldpay stock in a transaction that is expected to be tax-free to FIS and its shareholders for U.S. federal income tax purposes. FIS is committed to optimizing strong capital allocation strategies for each business that align with each business’s long-term goals. Further details related to transaction costs and the companies’ respective capital structures, governance, and other elements of the transaction will be announced at a later date.
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