Global Payments Inc., an Atlanta- based leading worldwide provider of payment technology services, announced late Tuesday that it entered into a definitive agreement to acquire San Diego-based Heartland Payment Systems, Inc.

Heartland brought its small and medium-sized market penetration to the deal. Additionally, Heartland's strengths in direct sales and technology-led distribution are highly complementary to Global Payments' expertise in 60 vertical markets with 2,000 technology partners, Global Payments said in a release.

Global Payments said it expects to accelerate revenue growth by combining Heartland's deep expertise in technology solutions with its OpenEdge partner integration, network and marketing capabilities to create a distinctive set of solutions and distribution. In addition, Global Payments plans to leverage Heartland's product and sales capabilities globally through direct distribution in the 29 countries in which Global Payments currently does business. Opportunities to cross-sell Heartland's point of sale, payroll, loyalty and gift solutions into Global Payments' core U.S. and international markets will be augmented by deeper penetration into key Heartland vertical markets including restaurant and education.

The combined company will provide market-leading payments solutions to nearly 2.5 million merchants globally. On a combined basis, the businesses expect to generate in excess of $3 billion of adjusted net revenue and $1 billion of EBITDA annually. As a result of the transaction, Global Payments anticipates raising its cycle guidance to high-single digit organic adjusted net revenue growth, up to 75 basis points of cash margin expansion annually and mid-teens cash earnings per share growth.

“The combination of Global Payments and Heartland will be transformative for the worldwide payments industry,” Heartland Chairman/CEO Bob Carr said. “I believe the combination of our companies will become the most valuable payments company on the planet. Heartland is excited to team with a truly international company. In the U.S., Heartland will continue to operate under its brand and under its business model of fair dealing – with the Merchant Bill of Rights and the Sales Professional Bill of Rights guiding the way to future growth and innovation.”

Global Payments will acquire Heartland in a cash-and-stock transaction for $100 per share, representing a transaction value of approximately $4.3 billion. Consideration for the transaction will consist of 0.6687 shares of Global Payments stock and $53.28 for each share of Heartland stock at closing, subject to the terms of the merger agreement. Existing Global Payments' shareholders will own approximately 84% of the combined entity. Global Payments intends to fund the cash consideration with fully-committed debt financing. The merger agreement has been unanimously approved by each company's board of directors.

The parties said they expect the merger to close in Global Payments' fiscal 2016 fourth quarter, subject to regulatory approval and customary closing conditions, as well as approval by Heartland's shareholders.

Instant Insights /

Heartland Acquired by Global Payments, Inc.

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