As Elliot activist can help global payments reduce stock price

Company: Global Payments Inc (GPN)

Business: Global payments It is a technology company that provides software and services to its customers worldwide. Thanks to the segment of trade solutions, it provides payments and software worldwide for small and medium -sized enterprises and chooses medium market customers and enterprises. It offers resolution, settlement and financing services, customer support, return permit, reconciliation and management services, rental rental, sales and deployment, payment safety, consolidated account and reporting. It offers many business management solutions that streamlined businesses for customers in many vertical markets. Thanks to the Extuter Solutions segment, it provides financial institutions and retail technology to manage portfolios. It provides flexible commercial payments, accounts and electronic alternative solutions that support B2B payment processes for businesses and governments.

The stock market value: $ 19.98b ($ 81.93 for the action)

Activist: Elliott Investment Management

Property: N/a

Average cost: N/a

Activist comment: Elliott is a very successful and insightful investor -activist. The firm’s team includes analysts of leading technology firms, engineers, operational partners – former technology and CEOS. Evaluating the investment, the firm also hires special consultants and general management consultants, analysts of experts and industry specialists. Elliott often watches companies many years before investing and has a wide stable impressive council candidates. The firm has historically focused on strategic activity in the technology sector and has successfully achieved this strategy. However, over the past few years, its activity has grown, and Elliott has been engaged in much more activity -oriented activity and creates a value of the council at a much greater width of companies.

What is happening

Elliot has took the position in global payments.

Behind the scenes

Global payments are the leading provider of payments and software solutions focused on small and medium-sized merchants and choose medium market customers and enterprises. The company works through two segments: trade decisions and issuers. Merchant Solutions, which makes about three quarters of total sales, provides payment decisions that allow customers to make a card, check and digital payments, offering permit, settlement, financing and other services. Simply put, global payments, like a buyer, acts as a mediator between the trading and card network to allow and promote operations. Thanks to the issuer segment, global payments provide comprehensive trade solutions that support the issuer’s payments through such proposals as basic processing, enterprise token and more. This segment was formed in 2019 next Combination Global payments and general system services (“TSYS”) in the merge of all shares are equal to create a leading payment company with the presence both in purchasing and emission services.

Peak in 2021 approximately $ 220 per share and the value of the enterprise to profit to interest, taxes, depreciation and depreciation (EV/EBITDA), which goes around 25 times, the company trades about $ 80 for the share and highly unambiguous today. The company managed to undergo water during a pandemic, despite the global slowdown and its attention to small and medium -sized enterprises. However, sales growth has slowed down since 2020, and now below the main market is high market growth, which means market share loss for violators such as Stripe, Clover Fiserv, Shopify and others. It’s all very interesting, but not what this activist is going. It’s about a company that has done poorly received Purchase “Bet on Farm” And now it is at the spilling point that will determine its future.

April 17 Global payments announced that there were agreed to purchase WorldPay From Fidelity National Information Services (FIS) and a private GTCR firm. Tripartite acquisition of cash and stock also provided global payments that deprive their issuers (previously known as TSYS business) for FIS in an agreement that estimated the WorldPay of $ 24.25 billion, and Ember Solutions-13.5 billion. After the announcement of shares of global payments, 17%decreased for many good reasons: (I) This acquisition was announced after the responsibility of management on their investor day 2024 to increase the profitability of shareholders, deprivation Advancedand (III) the company paid too much for the WorldPay-all 10.5 times eBitda compared to 6.5 several world payments. Moreover, investors are skeptical of this kind in the payment space after two of the three largest transactions made in the wave of consolidation 2019 FIS – WorldPay).

But the good news is that the failure is estimated. The leadership believes that the WorldPay transaction has a strategic point for global payments, simplifying its business model in a net game provider, and that it will provide $ 600 million with annual synergies and $ 200 million in income. The market does not believe it or little to believe that leadership can achieve these synergies. Whence the shares are traded today when the management can come anywhere close to the achievement of these synergies and the implementation of this transaction, it will be a good return for shareholders. Now this campaign needs help in fulfilling and improving the authority, and Elliott can provide both.

There are companies that can use the submission of shareholders on the council and companies in need. Global payments are much closer to the last. The restored council, which is responsible for management, is obliged to the M&A moratorium and adds members with the experience of integrating high acquisitions, almost immediately to restore investors’ trust in the company. The Council can then start de-reputation and possibly redeem stocks at the appropriate time if Global Payments shares are still significantly undervalued. We also expect the council to make the most important tips that control and evaluate the top management, but we do not think that compared to such a large acquisition, there will be any changes to the materials.

Considering the almost universal counteraction to the acquisition of WorldPay and low confidence in investor management, we could expect Elliot to get out on this board with any reasonable slate. In a challenged situation for a unitary board of 10 people using a universal proxy card, global payments will almost certainly face a significant defeat. Recently Elliot won two of four places Phillips 66 in proxy -warts with a much greater degree of difficulty. The fund has made its reputation activists almost two decades ago, as mainly strategic activists in technology campaigns, making great profitability, receiving companies or participating in the acquisition. However, Elliott has since become a more wider and more comprehensive activist in the sphere of strategy, sector and geography. Today, the firm often makes its best activity from the Council level. We believe that a restored advice that includes an Elliott representative, restore investors’ trust and increase the likelihood of successful WorldPay integration.

Ken Skvir is the founder and president of the 13D monitor, an institutional scientific and research service for shareholders’ activity, as well as the founder and managers of the 13D -activist fund portfolio, a mutual fund that investes in the portfolio of 13D investments.