How activist Elliott can help Global Payments lift its share price

Company: Global Payments Inc (GPN)

a job: Global payments It is the payment technology company that offers programs and services to its customers worldwide. Through the Merchant Solutions Solutions, it provides payment technology and software solutions worldwide for small and medium -sized companies and the choice of market customers and institutions. Provides delegation, settlement, financing, customer support services, solving response, reconciliation management and dispute management services, peripheral rental, sales and publishing, payment safety services, unified bills and reporting. It provides a group of business management programs that simplify commercial operations for customers in many vertical markets. Through the source solutions sector, it provides financial institutions technologies and retail technologies to manage their cards. It provides flexible commercial payments, paid accounts and electronic payment of alternative solutions that support B2B payments for companies and governments.

Market value shares: 19.98 dollars ($ 81.93 For one stock)

Activist: Investment Department Elliot

ownership: us

Average cost: us

Activist’s comment: Elliot is a very successful active investor. The company’s team includes analysts from private technical stock companies, engineers and operating partners – former technology executives and Coos. Upon evaluation of investment, the company also rented specialization and public administration consultants, experts and industry experts. Elliot often sees companies for many years before investing and have a wide -ranging stable from the admired board candidates. The company has historically focused on the strategic activity in the technology sector and was very successful with this strategy. However, over the past few years, its group has grown, and Elliot has been doing a lot of activity directed towards governance and creating a value of the plate level in a larger range of companies.

What is happening

Elliot take sides In global payments.

backstage

Global Payments is a pioneer for payment processing solutions and software solutions, and focuses on providing young and medium traders and choosing market customers and institutions. The company works through two parts: merchant solutions and source solutions. Merchant Solutions, which contributes to about three quarters of total sales, provides payment solutions to enable customers to accept cards, checks, digital payments, and provide mandate, settlement, financing and other services. Simply put, global payments, as a commercial level, act as a road between the merchant and the card network to permit and facilitate transactions. Through the source solutions sector, global payments provide comprehensive commercial solutions that support the ecosystem to push exporters through offers such as basic treatment, institutional code and more. This part was formed in 2019 Mix One of the global payments and total system services (“TSYS”) in the process of merging everything equal to the establishment of a leading payment company with the presence of the merchant and source services.

It reached its peak in 2021 by about $ 220 per share and the value of the institution for profits before benefits, taxes, depreciation and firefighting (EV/EBITDA) from about 25-Times. The company is trading today about 80 dollars per share and a large number of half. The company was able to walk in the water during the epidemic despite the global slowdown in transactions and its focus on small and medium enterprises. However, sales growth has slowed dramatically since 2020, and is now less than the high growth rate in the market, which implicitly means losing its share in the market such as Stripe, Fiserv’s Clover, Shopify and others. This is all very interesting, but not what this activist campaign revolves around. This is about a company that was badly received “The farm’s bet” is the acquisition It is now at a turning point that will determine its future.

On April 17, global payments announced that they were He agreed to obtain worldpay From Fidelity National Information Services (Fis) and GTCR private stock company. The acquisition of three -time money and participation also included global payments to drop its exported solutions (previously known as Tsys) to Fis in a deal estimated by WorldPay at $ 24.25 billion and source solutions at $ 13.5 billion. Global payment shares decreased by 17 % after the announcement for many good reasons: (1) This acquisition was announced after the administration’s obligations on its investor day 2024 to follow up on the increasing contributions of the shareholders and disruption, most of them, small acquisitions on TS, (2), the administration has a busy record in integration (or failure to integrate). AdvancedmdAnd (3) The company paid a lot against WorldPay-Get it in Ebitda 10.5-Times for 6.5-Times Global Pelless trading in. Moreover, investors became skeptical in deals of this type in the payment area after they were two of the three largest deals made in the 2019 wave of monotheism are not binding (global payments – Tsys and Fis – WorldPay).

But the good news is that failure is priced. The administration believes that the WorldPay transaction has a strategic meaning of global payments, which simplifies its business model in the provider of pure trade solutions, and that it will save $ 600 million in custody of the annual cost and 200 million dollars in revenue synergy. The market does not believe in this or does not mention that the administration can achieve this synergy. From the place where the stocks are trading today, if the administration is able to close it anywhere to achieve this synergy and implementation in this deal, it will be a great return for the shareholders. What this company needs at the present time is to assist in implementation and improved credibility, and Elliott can save both.

There are companies that can use shareholders in the board of directors and the companies you need. Global payments are much closer to the last. The re -formed board of directors bears the responsibility of the administration, and is committed to the Café of Integration and Procularity and adds members who have experience in integrating large acquisitions almost immediately to the investor’s confidence in the company. After that, the Council can start canceling the decline and perhaps re -purchasing shares in time if the global payment share is still high. We also expect the Board of Directors to do the most important councils of councils – overseeing and evaluating senior management, but we do not believe that there will be any changes in material management before such a great acquisition like this.

Looking at almost global opposition to acquire WorldPay and the low investor confidence in management, we expect Elliott to be able to walk on this council with any reasonable list. In a disputed position of the 10 people’s unitary council using a global agent card, global payments will definitely face a great defeat. Elliot recently Two of four seats won In Philips 66 in the Battle of an agent with a higher degree of difficulty. The fund achieved its reputation as activists nearly two decades ago as a strategic activist in technology companies, which makes great returns in selling companies or participating in the acquisition. However, Elliot has since evolved into a broader and comprehensive activist in strategy, sector and geography. Today, the company often performs its best activity than the plate level. We believe that a council has been reshaped includes an Eliott representative will restore investor confidence and increase the possibility of a successful integration of WorldPay.

Ken Squire is the founder and head of 13D Monitor, an institutional research service on shareholders ’activity, founder and manager of the 13D activist Fund portfolio, a joint fund that invests in a set of 13D active investments.