Exclusive: Payments giant FIS prepares to break up-sources

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Photo illustration of one hundred dollar notes in Seoul
One hundred dollar notes are seen in this photo illustration at a bank in Seoul January 9, 2013. REUTERS/Lee Jae-Won

NEW YORK, Feb 10 (Reuters) - Banking and payments conglomerate Fidelity National Information Services Inc (FIS.N) is making preparations to break up, undoing a $43 billion acquisition it completed four years ago, people familiar with the matter said on Friday.

FIS plans to pursue a tax-free spin-off of its merchant business, which processes payments for companies, the sources said. The spin-off will take many months to be completed, and FIS will also entertain any acquisition offers for the unit during this period, the sources added.

Much of FIS's merchant business consists of Worldpay, which it bought for $43 billion in 2019. Since then, FIS shares have lost more than half their value, leaving it with a market capitalization of $45 billion, as the company fights to stay competitive with old and new financial technology players promising better and cheaper services.

The Jacksonville, Florida-based company could announce the spinoff as early as next week, unveiling the results of a strategic review it embarked upon in December following pressure from hedge funds D.E. Shaw and JANA Partners, according to the sources.

The sources cautioned that no transaction is certain and asked not to be identified discussing confidential deliberations.

FIS declined to comment. The company is due to report its fourth-quarter earnings on Feb. 15.

Several conglomerates, including General Electric Co (GE.N), Johnson & Johnson (JNJ.N), Kellogg Co (K.N) and Toshiba Corp (6502.T), have broken up their sprawling businesses over the past few years amid pressure from investors to become leaner and focus on enhanced profitability in some of the core businesses.

FIS's break-up would leave it with a core processing systems business, enabling transactions among banks and other financial institutions, as well as its capital markets division serving investment firms.

Merchant solutions makes up about 30% of the company's revenue, while its banking solutions arm constitutes about 46%, and capital market solutions the remainder.

Reporting by David French, Anirban Sen and Milana Vinn in New York; Additional Reporting by Amy-Jo Crowley in London; editing by Diane Craft

Our Standards: The Thomson Reuters Trust Principles.

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Anirban Sen is the Editor in Charge for U.S. M&A at Reuters in New York, where he leads the coverage of the biggest deals. After starting with Reuters in Bangalore in 2009, Anirban left in 2013 to work as a technology deals reporter in several leading business news outlets in India, including The Economic Times and Mint. Anirban rejoined Reuters in 2019 as Editor in Charge, Finance to lead a team of reporters, covering everything from investment banking to venture capital. Anirban holds a history degree from Jadavpur University and a post-graduate diploma in journalism from the Indian Institute of Journalism & New Media. Contact:+1 (646) 705 9409

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Milana Vinn reports on technology, media, and telecom (TMT) mergers and acquisitions. Her content usually appears in the markets and deals sections of the website. Milana previously worked at GLG and PE Hub, where she spent several years covering TMT deals in private equity. She graduated from CUNY Graduate School of Journalism with Masters in Business Journalism. Contact: 347-463-7957