© Reuters.
By Scott Kanowsky
Investing.com — Fintech firm FIS (NYSE:) has announced it is spinning off its business solutions unit, undoing a multi-billion dollar purchase it made just four years ago, in a bid to improve growth and shareholder returns.
In a statement Monday, US-based FIS said the division’s tax-free arm, which includes payment processor Worldpay it bought for $43 billion in 2019, is expected to be completed within of the next twelve months. The transaction will improve the performance of both companies, strengthen customer services and simplify operational management, argued FIS.
“We are confident that this is the right time to separate from Worldpay,” said FIS President Jeffrey Goldstein. “The pace of payment disruption is accelerating rapidly, requiring further investment in growth and a different capital allocation strategy for our Merchant Solutions business.”
FIS added that Charles Drucker, who previously served as CEO of Worldpay, has been named “strategic advisor” in the spin-off process. If the move is completed as expected, Drucker will resume his position at the head of the company, FIS announced.
The decision is meant to end FIS’s longstanding drive to integrate Worldpay into its broader corporate structure. When the deal was first disclosed, FIS claimed it had “complementary solutions and services” with Worldpay.
However, since then, FIS shares have fallen by more than half their value. FIS, formerly known as Fidelity National Information Services Inc, has since come under increasing pressure from activist shareholders to optimize the business structure in order to increase profits.
Truist analysts praised FIS for being one of the first so-called FinTech companies to split its operations, but noted that it still sees “little opportunity to materially accelerate organic revenue growth.”
In a separate announcement, FIS delivered earnings guidance for its first quarter and fiscal year that missed Bloomberg consensus expectations.
FIS shares slumped by almost a sixth in early US trading.
