Shares of payment technology companies Fidelity National Information Services (FIS) – Get Report and Global Payments (GPN) – Get Report moved in opposite directions Monday, after a media report said that their merger talks broke down.
The deal could have been valued at $70 billion, knowledgeable sources told The Wall Street Journal.
Fidelity National, with a market capitalization of $87 billion, recently traded at $140.05, down 3.6%. The stock has firmed 0.7% year to date.
Global Payments, with a market cap of $61 billion, traded at $203.22, up 3.5%. It has gained 11% year to date.
The companies planned to announce a transaction this week, but negotiations collapsed in the past few days, the Journal’s sources said. They didn’t know what caused the breakdown.
Some sources told the paper that the talks had little chance to be revived quickly but could be later.
Morningstar analyst Brett Horn likes Fidelity National’s long-term prospects. He puts fair value on the stock at $131.
“Overall, we like the long-term picture for FIS,” he wrote after its most recent earnings report in October.
“The company’s segments could all be characterized as industry leaders with attractive margins and fairly stable revenue, and limited capital needs should allow FIS to generate strong free cash flow.”
Further, “from a long-term perspective, the pandemic could benefit the industry, as it appears to have accelerated consumers’ shift away from cash,” Horn said.
“Additionally, we think part of the rationale for the [Worldpay] acquisition was to strengthen the company’s position in online payments. This area has become too large to ignore, and the pandemic and the resulting spike in online activity has only reinforced the importance of capabilities in this area.”