How activist Elliott can help Global Payments lift its share price

Company: Global Payments Inc (GPN)

Business: Global Payments It is a payment technology company that offers software and service to its customers globally. Thanks to the seller solutions segment, it provides global payment technology and software solutions to small and medium -sized enterprises and selects Middle Market and Corporate Customers. Authorization, Reconciliation and Funding Services, Customer Support, Reversal Decision, Reconciliation and Dispute Management Services, Terminal Rental, Sales and Distribution, Payment Security Services, Consolidated Billing and Reporting. It offers a series of business management software solutions that facilitate business operations to customers in many vertical markets. Through the exporting solutions segment, it provides financial institutions and retailers to manage card portfolios. It provides flexible commercial payments, accounts to be paid and electronic payment alternative solutions that support B2B payment processes for businesses and governments.

Stock market value: $ 19.98b ($ 81.93 per share)

Activist: Elliott Investment Management

Ownership: N/A

Average Cost: N/A

Activist Comment: Elliott is a very successful and intelligent activist investor. The company’s team includes leading technology from private capital companies, engineers, business partners – old technology CEOs and COOs analysts. While evaluating an investment, the company also hires expertise and general management consultants, expert cost analysts and industry experts. Elliott has followed companies for years before investing and has impressive board candidates. The company has historically focused on strategic activism in the technology sector and has been very successful in this strategy. However, in the last few years, the activism group has grown and Elliott has been doing much more governance -oriented activism and creating value from the level of board of directors of companies.

What’s going on

Elliott has It took a position global payments.

Behind the curtain

Global Payments is a leading provider of payment processing and software solutions focusing on serving small and medium -sized traders and selecting mid -market and corporate customers. The company operates through two segments: seller solutions and exporting solutions. SELLER SOLUTIONS, which contributes in approximately three quarters of the total sales, provides payment solutions to enable customers to accept cards, control and digital payments, providing authorization, reconciliation, financing and other services. Simply put, global payments act as a mediator between the merchant and the card network to allow and facilitate transactions as a merchant. It provides comprehensive trade solutions for exporters through proposals such as Global Payments, Basic Processing, Corporate Tokyunation and more through the broadcasting solutions segment. This segment was founded in 2019. combination Global payments and total system services (“TSYS”) in the merger of an equal stock to create a leading payment company that has acquired and exist in export services.

In 2021, the company, which peaked to $ 220 per share and interest, taxes, depreciation and depreciation (home/favök) and a corporate value before the floor of approximately 25 times, the company is trading about $ 80 per share and a high single -digit floor. Despite the global slowdown in the transactions and focus on small and medium -sized enterprises, the company managed to flood during the pandemi. However, sales growth has slowed down significantly since 2020, which is below the high single single growth rate of the market, which is now the core, and implies the loss of market share like Streep, Fiserve, Clover, Shopify and others. It’s all very interesting, but this is not what the activist campaign is. This is about a company that makes a badly considered “Bet The Farm” and is at the point of bending that will now determine its future.

Global payments on April 17, He agreed to buy Worldpay Fidelity National Information Services (FIS) and private capital company GTCR. The three -way cash and sharing purchasing included an agreement of exporting solutions (previously known as TSYS), and global payments that exported $ 24.25 billion and to FIS for solutions that exported $ 13.5 billion. The shares of global payments decrease 17% after the announcement for many good reasons: (i) This purchase was explained to follow the increasing shareholder returns, disposal and small bolts purchases of the management on the 2024 Investor Day, (ii) to be integrated into TSYS and integrated, and this is a bad past to be integrated. It has history. AdvancedmdAnd (iii) Company paid a lot of money for Worldpay-6.5-6.5 times multiple global payment transactions against FAVÖK. In addition, investors have grown skeptical about such agreements in the payment area after two of the three biggest agreements made in the 2019 consolidation wave (Global Payments – TSYS and FIS – Worldpay).

But the good news is that failure is pricing. Management thinks that Worldpay process means a strategic meaning for global payments, simplifies the business model to pure game trade solutions provider and thinks that annual cost synergies and $ 200 million income synergies. The market does not believe it, or there is little belief that management can reach these synergies. If the stocks are trading today, if the management can come close to reaching these synergies and executing in this process, it will be a good return for shareholders. What this company needs now is to help execution and improved reliability, and Elliott can provide both.

There are companies on the board of directors and companies that need this. Global payments are much closer to the second. Members who hold the management responsible, commit a M&A Moratorator and integrate major purchases will immediately bring back the trust of the investor to the company. Then, if the stock of global payments is still worthless, it may start to keep lever and possibly get shares at the appropriate time. In addition, the most important thing of the Board we expect to do the boards – check the top management and evaluate, but we do not think there will be any material management change before such a great acquisition.

Considering the trust of the Worldpay purchase almost universal opposition and the trust of low investors to management, we expect Elliott to walk to this board with any reasonable arduvaz. Using a universal proxy card, the unitary board of 10 people will be controversial, global payments will be almost absolutely important defeat. Elliott recently He won two of four seats In a proxy fight with a much higher degree of difficulty in Phillips 66. Almost twenty years ago, the Fund made its reputation as a strategic activist in technology companies and enabled companies to participate in the purchase or purchase. However, Elliott has become a much wider and more comprehensive activist in the strategy, sector and geography since then. Today, the company usually makes the best activism from the board level. We believe that a reconstructed committee containing a Elliott representative will recover the trust of the investor and increase the possibility of a successful integration of Worldpay.

Ken Squire is the founder and president of the 13D Monitor, a corporate research service on shareholder activism and is the founder and portfolio manager of the 13D Activist Fund, an investment fund investing in the investment portfolio of the activist 13D.