Atlanta-based Global Payments has inked a definitive agreement to acquire NJ-based Heartland Payment Systems.
The cash-and-stock transaction is valued around $4.3 billion.
The combined company will provide payments solutions to nearly 2.5 million merchants globally. On a combined basis, the businesses expect to generate in excess of $3.0 billion of adjusted net revenue and $1.0 billion of EBITDA annually.
The transaction significantly expands Global Payments’ U.S. direct small and medium-sized enterprise distribution, merchant base and vertical reach. Heartland’s strengths in direct sales and technology-led distribution are highly complementary to Global Payments’ expertise in 60 vertical markets with 2,000 technology partners.
In addition, Global Payments plans to leverage Heartland’s product and sales capabilities globally through direct distribution in the 29 countries in which Global Payments currently does business. Opportunities to cross-sell Heartland’s point of sale, payroll, loyalty and gift solutions into Global Payments’ core U.S. and international markets will be augmented by deeper penetration into key Heartland vertical markets including restaurant and education.
Global Payments believes the transaction will be mid-single digit accretive on a percentage basis to cash earnings per share in fiscal 2017 and double-digit accretive thereafter. Global Payments expects to realize at least $50 million in synergies in fiscal 2017 and approximately $125 million of annual run-rate synergies thereafter.
The parties expect the merger to close in Global Payments’ fiscal 2016 fourth quarter.
Global Payments reported third calendar quarter revenues grew 6.2% to $748.8 million, compared to $704.9 million in the year ago quarter. Net income rose 14.1% from $86.4 million in 3Q/14 to $103.0 million for 3Q/15, according to CardData.
Heartland Payment Systems reported quarterly net revenue was a record $214.6 million, up 26.7% from the third quarter of 2014, with organic net revenue growth of 11.3% for the quarter. Quarterly net income was $23.9 million, up 16.6% from $20.5 million in the third quarter of 2014, according to CardData.
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