What happened
Shares of Worldpay (WP), a payment processing company, popped 18.5% in March, according to data from S&P Global Market Intelligence. The stock has gained 48.9% in 2019 through April 5.
For context, the S&P 500 index returned 1.9% last month and has returned 16% so far this year.
Image source: Getty Images. M&A = mergers and acquisitions.
So what
We can attribute Worldpay stock's outperformance last month largely to news that it's being acquired by Fidelity National Information Services (FIS -0.50%), also known as FIS, a financial services provider focused on retail and institutional banks. Following the March 18 announcement, shares of Worldpay rose 10%.
The deal (which my colleague Matthew Cochrane explores in depth here) "greatly expands FIS' capabilities by enhancing its acquiring and payment offerings and significantly increases Worldpay's distribution footprint, accelerating its entry into new geographies," the companies said in the press release. Worldpay shareholders will receive 0.9287 shares of FIS and $11.00 in cash for each share of Worldpay they own. The transaction values Worldpay at approximately $43 billion, including debt.
Data by YCharts.
Now what
The FIS-Worldpay merger is the latest in the payments space, as increased competition from fintech upstarts, such as Square, is driving industry consolidation.
The combined company will have approximately $12.3 billion pro forma 2018 annual revenue, according to the press release. Key benefits of the deal include the expected acceleration of FIS' organic revenue growth to 6% to 9% through 2021, and the anticipated generation of nearly $4.5 billion of free cash flow in three years.
