FIS also announced in a statement that the company is planning to spin off Worldpay in the span of the next 12 months and turn it into a separate company, which will be owned by its shareholders on a tax-free basis
Fidelity National Information Services Inc (FIS), the American banking and payments processing firm announced a tax-free write-down of its Merchant solutions business as part of building its operational and strategic focus, improving growth opportunities, and opening shareholder value. Fidelity National Information Services board had decided that the spin-off Merchant Solutions would be named Worldpay, stated the official statement released by the firm.
The current decision to spin off its merchant business is also a part of reversing an overlooking acquisition that cost more than $40 billion dollars. FIS also announced in a statement that the company is planning to spin off Worldpay in the span of the next 12 months and turn it into a separate company, which will be owned by its shareholders on a tax-free basis. The two companies are in hope of continuing a solid relationship, adding value to both their clients and their businesses. FIS shares have lost their market value since the firm acquired Worldpay, which closed down at $66 on Monday, with a market capitalization of $39 billion, reports Reuters.
According to Reuters reports, the company had been under pressure from investors like Jana Partners and D.E Shaw. The investors have urged FIS to carry out a review of its operations and showed that there is a considerable reduction in the firm’s share price to firms like Fiserv Inc and Global Payments Inc. The firm’s profit forecast falls between $5.7 and $6, which is less than the analysts’ estimate of $6.5.
The company acting to the pressures of investors revealed a review of its operations in December and appointed Stephanie Ferris as the company’s new leader. The CEO also mentions that the separation of the companies would favor the growth strategy of Worldpay and focus more on M&A, which they were not able to give much attention to as the business was tied to the parent company. Ferris also stated that a different capital distribution would give prior focus on M&A that staying within the parent company won’t provide.
FIS has cut several jobs after the review was launched and cost savings of around $1 billion are underway syncing with the broader reshaping plans of the business. The departure of Worldpay from the parent company would provide FIS with transactions among other banks, and processing systems business, enabling transactions with the capital market division assisting investment firms. “I’m confident that today’s announcement advances our goal of optimizing performance and returns while improving the satisfaction of our clients and colleagues. We will create two more focused, agile companies that can pursue tailored strategies that are aligned with specific long-term growth opportunities” stated Stephanie Ferris
FIS is among many companies that decided to make changes in the firms due to investor pressures along with Johnson & Johnson, Toshiba Corp, General Electric Co, and Kellogg Co. These companies have made the required changes and focused on improving the profits on important parts of the business.
Worldpay will continue to be a top supplier of integrated payment technology solutions for eCommerce, enterprise, and small and medium-sized enterprises. Worldpay is currently the largest worldwide merchant acquirer by transactions and will have $2 trillion in payment volume in 2022. (SMB). With $4.8 billion in revenue and $2.3 billion in adjusted EBITDA in 2022, Worldpay is a market leader in cross-border eCommerce.
FIS is a leading provider of technology solutions for businesses and financial institutions across industries globally. The company facilitates the movement of commerce by unraveling the financial technology that influences the world’s economy.