TSYS Makes $2.35 Billion Merchant Service Play (Jan. 27, 2016)
TSYS continued its push to expand its role in the payments value chain with a big move in the merchant services space, reaching a definitive agreement to acquire merchant solutions provider TransFirst for $2.35 billion from current owner Vista Equity Partners. The all-cash transaction is expected to close in the second quarter of 2016, subject to regulatory approvals and closing conditions. TransFirst provides merchant solutions to more than 235,000 small and midsize businesses in the U.S., with a particular focus on integrated payments, e-commerce and omnichannel services. The deal also increases TSYS’s footprint in the small and midsize enterprise (SME) segment—an area TSYS called “particularly … profitable and fast-growing.”
As a result of the transaction, TSYS will become the sixth-largest U.S. acquirer, based on net revenue, supporting more than 645,000 merchants, the company said. The deal also will bring more than 1,000 TransFirst employees throughout the U.S. into the TSYS fold. “With the added strength of TransFirst, TSYS will be uniquely positioned with significant scale and strength across issuer processing, merchant services and prepaid program management,” said M. Troy Woods, chairman, president and CEO, TSYS. Under terms of the transaction, John Shlonsky, TransFirst president and CEO, will assume the role of TSYS senior executive vice president and president of the TSYS Merchant segment, replacing Mark Pyke in the position.
The TransFirst deal is TSYS’s biggest acquisition ever by dollar amount, surpassing the Columbus, Ga.-based company’s $1.4 billion purchase of prepaid giant NetSpend in 2013—a “transformational” deal that represented TSYS’s entry into the consumer-facing program management business. At the time, the company discussed its strategy of expanding its role in the payments value chain—a plan that takes another step forward with this latest acquisition.
Click here for a video clip of TSYS and TransFirst leadership discussing the deal.
TSYS this week also released its earnings data for the fourth quarter of 2015, as well as the full year. The company saw total revenue growth of $716.8 million in Q4, an increase of 12.9 percent year over year. For the full year, revenues were up 13.6 percent, to $2.8 billion.