Global Payments to Acquire Heartland Payment for $4.3 Billion to Accelerate Growth

Global Payments Inc., a payment technology company, announced that it has entered into a definitive agreement to buy smaller rival Heartland Payment Systems, Inc., one of the nation’s largest payment companies.

Headquartered in Atlanta, Georgia, Global Payments is a provider of payment technology services that delivers innovative solutions driven by customer needs globally. The company’s technologies, partnerships and employee expertise enable it to provide a broad range of products and services that allow its customers to accept all payment types across a variety of distribution channels in many markets around the world. For the fiscal year which ended in May, the company’s revenue was $2.77 billion.

Meanwhile, Heartland Payment Systems, Inc., one of the largest payment processors in the United States, offers payment-processing services for merchants and education providers, including higher-education loan services and school nutrition programs. It logged revenue of $2.31 billion for 2014.

The deal significantly expands Global Payments’ US 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. The combination will leverage Global Payments’ scalable, worldwide infrastructure, and drive substantial technological and operational synergies.

The combined company will provide market-leading 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. As a result of the transaction, Global Payments anticipates raising its cycle guidance to high-single digit organic adjusted net revenue growth, up to 75 basis points of cash margin expansion annually and mid-teens cash earnings per share growth.

This partnership with Heartland marks a major milestone for our company, significantly enhancing our direct presence in our largest market and transforming Global Payments into the leading provider of integrated payments technology solutions in the world, said Jeffrey S. Sloan, Chief Executive Officer of Global Payments. The combination of strong businesses and cultures in high growth markets will generate exceptional opportunities for our employees, customers, partners and shareholders worldwide.

The combination of Global Payments and Heartland will be transformative for the worldwide payments industry, said Robert O. Carr, Chairman and CEO of Heartland. Under Jeff’s leadership, I believe the combination of our companies will become the most valuable payments company on the planet. Heartland is excited to team with a truly international company. In the US, Heartland will continue to operate under its brand and under its business model of fair dealing—with the Merchant Bill of Rights and the Sales Professional Bill of Rights guiding the way to future growth and innovation.

Global Payments will acquire Heartland in a cash-and-stock transaction for $100.00 per share, representing a transaction value of approximately $4.3 billion. Consideration for the transaction will consist of 0.6687 shares of Global Payments stock and $53.28 for each share of Heartland stock at closing, subject to the terms of the merger agreement. Existing Global Payments’ shareholders will own approximately 84% of the combined entity. Global Payments expects the deal to close in the quarter ending in May.

Card-processing firms have been rushing to consolidate as they wish to grab the growth sparked by a rising number of retailers offering online and mobile shopping.