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Global Payments Rides on Buyouts in Consolidating Industry

Zacks Equity Research

Global Payments, Inc. GPN a provider of payment technology and software solutions to customers globally, has a very active inorganic growth strategy underpinned by a number of acquisitions made over the years.

Notably, Global Payments is on track to acquire Total System Services Inc. TSS. This partnership will create a preeminent pure play payments technology company, focused on small and medium businesses and leading financial institutions. The merger accelerates Global Payments’ software driven payment strategies and positions its merchant business as the leading provider of integrated payments in e-commerce and omni-channel solutions globally.

The highly complementary nature of these leading payments-focus businesses provides for significant revenue enhancement opportunities. Global Payments will gain from increased sales of cross-selling Total System’s products like Vital POS for retail to its existing merchants. Total Systems will also add more than 500 sales professionals and will more than double Global Payments’ domestic financial institution base of referral partners.

Global Payments has acquired a number of companies to further its software driven payments strategy.  To this end, last year it acquired SICOM Systems and AdvancedMD. SICOM is a provider of end-to-end enterprise, cloud-based software solutions and other technologies to quick service restaurants and food service management companies. SICOM’s technologies are complementary to its existing Xenial solutions, and this acquisition will expand Global Payments  software driven payments strategy by increasing its capabilities and expanding its existing presence in the restaurant vertical market.

AdvancedMD is a provider of cloud-based enterprise software solutions to small-to-medium sized ambulatory care physician practices in the United States. This acquisition will expand Global Payments software-driven payments strategy in the healthcare vertical market, which is a large and fragmented market with strong payment fundamentals and attractive growth opportunities.

Global Payments also advanced its software-driven payments strategy in the health and fitness markets by acquiring ACTIVE Network.

Recently, Global Payments signed a new agreement with Togetherwork, which provides a management platform for a group of 22 innovative SaaS companies with solutions that span multiple vertical markets, including fundraising, recreation, and fraternal organizations. Togetherwork’s annual payment buying opportunity is currently $4 billion and it  provides growth opportunity.

In Global Payments’ e-commerce and omni-channel businesses, it is making significant progress with its new Unified Commerce Platform or UCP, which provides a single omni-channel payment solution worldwide through one API. The rollout of this platform to its global markets is slated by the end of 2019.

Gobal Payments’ acquisition strategy will keep it ahead in the fast consolidating payments space, which would create stiff competition. The industry has witnessed a string of deals in the recent times, with two mega merger of Fidelity National Information Services Inc. FIS and Worldpay and Fiserv, Inc.’s FISV acquisition of First Data Corp. In the same vein, PayPal Holdings bought Swedish fintech company iZettle in 2018.

Year to date, the stock has gained 27% compared with its industry’s growth of 43%.

Global Payments carries a Zacks Rank #3 (Hold).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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Fidelity National Information Services, Inc. (FIS) : Free Stock Analysis Report
Fiserv, Inc. (FISV) : Free Stock Analysis Report
Total System Services, Inc. (TSS) : Free Stock Analysis Report
Global Payments Inc. (GPN) : Free Stock Analysis Report
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