Global Payments to merge with TSYS in tie-up of Georgia fintech firms

Global Payments said Tuesday it will merge with rival TSYS to create a financial technology giant. Bob Andres bandres@ajc.com

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Global Payments said Tuesday it will merge with rival TSYS to create a financial technology giant. Bob Andres bandres@ajc.com

Atlanta-based financial technology company Global Payments will merge with Columbus-based rival TSYS, the latest such blockbuster move involving Georgia companies. The merger will create a bigger payments processor but also could mean job cuts.

Global announced the $21.5 billion, all-stock deal, on Tuesday, calling it a “merger of equals.” It’s the latest in a wave of combinations among companies that process how consumers and businesses pay for goods and services. It shows major financial technology, or fintech, companies want to team up to fend off competition from established rivals and from new players in Silicon Valley and overseas.

In a news release, executives said the merged firm will be known as Global Payments and will have dual headquarters in Atlanta and Columbus. The new company will process more than 50 billion transactions per year across 100 countries, serving 3.5 million merchants and more than 1,300 financial institutions.

“Our companies share common values, a strong culture of putting people first, and a relentless commitment to doing the right thing, making this combination the perfect fit,” M. Troy Woods, TSYS’ chairman and CEO said in a statement.

The deal is expected to close later this year and Woods will serve as chairman of the combined company. Jeff Sloan, the current chief executive of Global Payments, will carry on in that role in the merged company.

Payments processing is a critical and often overlooked part of the global economy, and Georgia is the payments capital of the United States. Companies with major presences in the state process some 70 percent of all debit, credit and gift card transactions in the nation each year, according to the American Transaction Processors Coalition. The industry supports more than 40,000 jobs in Georgia, according to the trade group's research.

Atlanta’s historic position as a banking hub and Georgia’s friendly regulatory climate have helped foster a broad financial technology ecosystem in the state that has cultivated companies such as Equifax, First Data, Global Payments, InComm and TSYS.

Other recent mergers involving Georgia companies include the January announcement that Wisconsin-based Fiserv would acquire Sandy Springs-based First Data for $22 billion, a deal that ignited merger-mania among payments companies.

In February, SunTrust Banks and BB&T announced a marriage designed to create the nation's sixth-largest bank. In March, payments giant FIS announced a $35 billion agreement to acquire Worldpay, which has major operations in Atlanta.

Roger Tutterow, a Kennesaw State University economist, said the merger is a better alternative to having Global Payments or TSYS acquired by an out-of-state rival.

“It makes good strategic sense for the two to get together,” Tutterow said. “It cements their status as a player in the fintech industry.”

Joining Global and TSYS, known as Total Systems Services, represents a union two of Georgia’s brightest fintech stars. Global went public in 2001. TSYS, which was founded in the 1960s as a credit card business within Columbus Bank & Trust, was spun out of what’s now known as Synovus Financial as an independent company in 2007.

Global Payments has about 11,000 employees worldwide, while TSYS has about 13,000. The combined company will have estimated annual revenue of $8.6 billion, which would place Global Payments at about No. 355 on the Fortune 500 list.

Global Payments expects to find “at least $300 million” in annual cost savings, or “synergies,” including streamlining technology, and through “eliminating duplicative corporate and operational structures,” which suggests job cuts are possible.

Tutterow said he expects the future Global Payments to be sensitive about the potential impact of cuts, particularly in Columbus where TSYS is one of the city’s largest private-sector employers along with Aflac and Synovus.

Like the Fiserv-First Data deal before it, the marriage of Global Payments and TSYS involves big companies that aren’t household names but that are central to how payments flow across the country and around the world.

Both companies help companies process credit, debit and other forms of electronic payments. Global is known for its payments software, while TSYS has a deeper footprint in e-commerce payments.

TSYS also helps banks issue credit and debit cards to customers. The company also will bring experience in person-to-person payments, where upstart financial technology firms, have made inroads in the business.

The payments world has been rocked by upstart competitors in online and mobile transactions, such as Square and peer-to-peer and business-to-business payments companies such as PayPal and Venmo.

Brett Huff, a managing director at Stephens Inc. and an analyst who covers the industry, said the Global Payments-TSYS marriage could force smaller FinTech companies to look around for partners. The deal, he said, “drives home the increasing desire and need of payments companies to achieve scale in product breadth, geographic reach and organic technology investment.”