BTIG says Global Payments slips after deal, pull back on capital return strategy

BTIG notes Global Payments (GPN) announced plans to acquire Worldpay for $22.7B, and simultaneously divest its Issuer Solutions segment for $13.5B. In aggregate between the two deals and inclusive of significant synergy assumptions by management, Global Payments expects to add $1.6bn of EBITDA in exchange for $10.75B net consideration. Commenting on the stock downward reaction, BTIG points out that investors in the stock prior to this morning were likely in it for the low-multiple and capital return strategy, with further upside potential from execution of the Investor Day strategy that was laid out last September. Now, Global Payments is pulling back on their capital return strategy and increasing leverage to 3.5-turns to acquire an asset that is moderately accretive to growth and comes with execution risk for the assumed synergies. All while doing so at a time with a very uncertain macro-outlook, it adds. The firm has a Neutral rating on the shares.