The financial services industry is experiencing unprecedented consolidation, with partnerships, deals, and acquisitions being made at a near-dizzying pace. Since the start of 2019, three of the eight largest
With these important happenings, we have to be fully updated, so let’s briefly review, in order, the five largest
The Five Largest Fintech Deals Of The Past Two Years
- Just this past March, Fidelity National Information Services, Inc. (NYSE:FIS) , commonly referred to as FIS, agreed to acquire Worldpay Inc (NYSE:WP) for $33.5 billion, in what will be the largest fintech deal ever. Upon completion of the deal, FIS shareholders will own about 57% of the company, with Worldpay investors receiving the remaining 43%. Management believes the transaction will result in about $400 million in cost savings and $500 million in new revenue opportunities for the new company, which will continue to operate under the FIS name. The deal combines one of the largest issuer processors, FIS, with one of the largest merchant processors, Worldpay. An issuer processor settles and authorizes credit and debit card transactions for the financial institution that issues the card. A merchant processor facilitates the same transactions for the seller. Thus, the new company will have data from both sides of the transaction. The deal also gives Worldpay an opportunity to quickly expand into large markets, such as Brazil and India, where FIS already has a presence.
- This past January, Fiserv Inc (NASDAQ:FISV) agreed to acquire First Data Corp (NYSE:FDC) for approximately $22 billion. Management believes the new entity, after realizing significant revenue and cost synergies, will generate $4 billion in free cash flow by 2022. Like the FIS acquisition of Worldpay, this new company will feature a huge market share in issuer processing, with First Data also having a large presence in merchant processing, especially with its popular Clover platform.
- In January 2018, Thomson Reuters Corp (NYSE:TRI) sold a majority stake in its financial and risk segment to investors led by Blackstone Group LP (NYSE:BX) for $17.3 billion. The business, rebranded as Refinitiv after the conclusion of the deal, competes with the infamous Bloomberg terminals by providing financial data on an open platform to its customers. Most of the cash was used by Reuters to pay down debt and authorize a large share buyback program.
- For the third time on this short list, we have another deal from 2019, when Ultimate Software Group, Inc. (NASDAQ:ULTI) was acquired by private investors for almost $11 billion. Ultimate Software provides a cloud-based, software-as-a-service (SaaS) suite of human capital management solutions. Before going private, Ultimate Software’s revenue, most of it recurring, increased 21% to $304.8 million. Ultimate Software has more than 5,600 customers and manages more than 48 billion employee records in its cloud. The company expects to reach $2 billion in total revenue by 2021.
- In August 2017, Cincinnati-based Vantiv Inc acquired London-based Worldpay Group for $9.8 billion. The new entity quickly assumed the Worldpay Inc name. The revenue and cost synergies in the FIS deal (see above) are in addition to the cross-selling opportunities and cost savings still being recognized from this deal. The transaction combined Vantiv’s large payment processing presence in the U.S. with Worldpay Group’s e-commerce and international payment footprint, making for a potent combination.