How activist Elliott can help global payments raise the price of their shares

Company: Global Payments Inc (GPN)

Business: Global payments is a payment technology company providing software and services to its customers worldwide. Through its Merchant Solutions segment, it provides technology for payments and software solutions worldwide for small and medium -sized business and selects medium -sized customers and businesses. It offers authorization services, settlement and financing, customer support, fee resolution, coordination and dispute management services, terminals, sales and implementation, payments security services, consolidated billing and reporting. It offers a number of business management software solutions that optimize customer business operations in numerous vertical markets. Through his segment of issuing solutions, he provides financial institutions and traders of technology to manage their card portfolios. It provides flexible trade payments, paid and e -payment solutions that support B2B payment processes for business and governments.

Stock market value: $ 19.98b ($ 81.93 of action)

Activist: Elliott Investment Management

Property: n/a

Average price: n/a

Activist Comment: Elliot is a very successful and insightful investor activist. The company team includes analysts from leading technology companies for private capital, engineers, operational partners – former executives and COO of technology. When evaluating the investment, the company also hires special and general management consultants, expert expert analysts and industry specialists. Elliot often has been watching companies for many years before investing and has a vast stable of impressive candidates for the board. The company historically focuses on strategic activism in the technology sector and is very successful with this strategy. However, over the last few years, his activism group has grown and Elliot has made much more activated activism and creates a value of board levels at much higher width than companies.

What happens

Elliott has occupied a position In global payments.

Behind the scenes

Global Payments is a leading supplier of payments and software processing focused on the service of small and medium -sized traders and choosing customers in the middle market and businesses. The company operates through two segments: Solutions and issuing solutions. Merchant Solutions, contributing to about three quarters of the total sales, provides payment solutions to enable customers to accept cards, checks and digital payments, offering permission, settlement, financing and other services. To put it, global payments as a commercial acquirer act as a mediator between the merchant and the network of cards to allow and facilitate transactions. Through its Global Payments Issue Solutions, it provides comprehensive trade solutions supporting the payment ecosystem for issues through proposals such as major processing, tokenization of the enterprise and others. This segment was formed in 2019. combination of global payments and general system services (“TSYS”) in the merger of all mergers of equal to the establishment of a leading payments company with the presence of both the services for the acquisition of the trader and the issues.

Declining in 2021 with approximately $ 220 per share and value of the profit, tax, depreciation and depreciation (EV/EBITDA), a multiple of about 25 times, the company today trades around $ 80 per share and with a high one -digit short one. The company managed to trample water during the pandemic, despite the global delay in transactions and its focus on small and medium -sized enterprises. However, sales growth has slowed down significantly after 2020, now under the main acquisition market in the market at a high growth rate, which implies the loss of market share of destroyers such as Stripe, Clover, Shopify and others of Fiserv. This is all very interesting, but not what this activist campaign is about. This is for a company that made it badly accepted Acquire the “bet the farm” And now it is at a point of folding that will determine its future.

On April 17, global payments announced that there was agreed to acquire WorldPay By National Information Services (FIS) and GTCR private shares. The three-way acquisition of money and an action also included global payments that divert their issues (previously known as TSYS) to FIS in a deal that estimates WorldPay at $ 24.25 billion and the $ 13.5 billion issuer solutions. Global Payments’ Shares Fell 17% Following The Announted for Many Good Reasons: (I) This Acquismti Was Announted After Management’s Commitments at Their 2024 Investor Day to Pursued Inc at most, small bolt-on acquisitions, (ii) management has a poor track record of integrating (or failing to integrate) acquisitions such as tsys and Advancedmdand (iii) the company paid too much for the WorldPay-getting it 10.5 times EBITDA compared to 6.5 times multiple global payments. In addition, investors have been skeptical of transactions of this kind in the payment space after two of the three largest transactions concluded in a 2019 consolidation wave of consolidation. FIS – WorldPay).

But the good news is that the failure is priced. The management believes that the WorldPay transaction has a strategic meaning for global payments, simplifying its business model in a clean -playing solution provider and that it will provide $ 600 million in a year and $ 200 million in revenue synergies. The market does not believe this or has little faith that management can achieve these synergies. From where shares are traded today, if the management can come anywhere close to the achievement of these synergies and the implementation of this transaction, it will be a pleasant return for shareholders. What this company needs at the moment is help with implementation and increased authenticity and Elliott can provide both.

There are companies that could use shareholders representation on board and companies that need it. Global payments are much closer to the last. A restored advice, which is responsible for the management, is committed to M&A moratorium and adds members with experience in integrating large acquisitions, will almost immediately restore investors’ trust in the company. The board can then start to de-laminate and possibly buy shares at the right time if the shares of global payments are still significantly undervalued. We would also expect the Council to do the most important thing that the advisors do – to observe and evaluate the higher leadership, but we do not think that there will be any changes in the management of materials before such a major acquisition as this.

Given the almost universal opposition to the acquisition of WorldPay and the low trust of investors in management, we would expect that Elliott will be able to enter this advice with any reasonable slate. In a contested situation for the Unith’s 10 people using a universal proxy card, global payments would almost certainly face significant defeat. Elliot recently Won two of the four seats In Phillips 66, in proxy fighting a much higher degree of difficulty. The Fund made its reputation as an activist almost two decades ago as a predominantly strategic activist in technology companies, making a great return that companies are sold or participated in the acquisition. Since then, Elliot has become a much wider and comprehensive activist in the strategy, sector and geography. Today, the company often makes its best activism from the board level. We believe that the restored council, which includes a representative of Elliott, will restore investor confidence and increase the likelihood of successful WorldPay integration.

Ken Squire is the founder and president of 13D Monitor, an institutional research service for shareholders’ activism, and founder and portfolio manager of the 13D activist fund, a mutual fund that invests in a portfolio of activist 13D investment.