Fidelity National Information Gains on Worldpay Interest

After the Financial Times reported that several private equity firms, including Advent and GTCR, are mulling the acquisition of a majority stake in Fidelity Information Services (FIS:US) Worldpay business, shares in the company gained as much as 6.5%.

The report quoted a discussed valuation of $15 billion. The Financial Times findings are based on insights from five unidentified people familiar with the matter.

The news report comes after FIS announced earlier this year that it plans to spin off its Worldpay business with the expectations it will be complete by early 2024.

FIS shares traded 19% lower year-to-date based on Friday’s closing price. This compares to the near 16% gain seen in the S&P 500 for the first half of 2023. 

The H1 underperformance comes despite the company’s better-than-expected earnings results published in late April. FIS earned $1.29 a share on an adjusted basis, topping the consensus for a profit per share of $1.21.

Revenue came in at $3.5 billion, again better than the $3.42 billion expected. The company’s Q2 guidance also came in better than what analysts were expecting. 

“We view the Q1 print as a solid first step in the company’s journey to reinvigorate growth and a good proof point of the new management team’s ability to execute,” wrote Barclays analyst Ramsey El-Assal.

On the Worldpay spinoff, the analyst commented:

“We believe it may prove somewhat challenging to pivot the business while at the same time, executing on large cost-cutting programs, especially as we head into a softening demand environment,” El-Assal said in his note to clients.

Just a few days ago, Representative Michael McCaul reported the sale of FIS shares, which was completed on May 12, when the stock closed at $55.07. Congressman Ro Khanna was also trading FIS shares in May.

Shares are now trading around the $58 mark.