Global Payments To Buy Heartland Payment Systems For $4.3 Bln

(RTTNews) - Payments processor Global Payments Inc. (GPN), Tuesday said it has agreed to buy smaller rival Heartland Payment Systems Inc. (HPY) for $4.3 billion in a cash and stock deal.

Global Payments will acquire Heartland in a cash-and-stock transaction for $100 a share. Heartland shareholders will receive 0.6687 shares of Global Payments stock and $53.28 in cash for each share of Heartland. Global Payments intends to fund the cash consideration with debt.

Global Payments said the deal will significantly expands its U.S. direct small and medium-sized enterprise distribution, merchant base and vertical reach. The combined company is expected to generate in excess of $3.0 billion of adjusted revenues annually.

Global Payments and Heartland are two of the major payment processors in the US, with Global Payments controlling about 2.9 percent of the global transactions processing market in 2014, while Heartland had about 2.1 percent.

"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 Sloan, CEO of Global Payments.

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 about $125 million of annual run-rate synergies thereafter.

The parties expect the merger to close in Global Payments' fourth quarter, subject to customary closing conditions as well as approval by Heartland's shareholders.

GPN closed Tuesday's trading at $1.42, up $1.09 or 1.55%, on the NYSE. The stock, however, dropped $1.92 or 2.69% in the after-hours trade.

HPY closed Tuesday's trading at $85.10, up $2.33 or 2.82%, on the NYSE. The stock further gained $9.05 or 10.63% in the after-hours trade.