👋🏾 Hi and welcome to Batch Processing! “Batches” are bi-weekly articles that include my reactions to recent(ish) industry news. Think of this as a behind-the-scenes look at the scratch pad that will eventually turn into a public post.

The “trench coat” theory of Worldpay’s M&A strategy

FIS, a multinational payments and banking technology company, announced that it will be marking down and spinning out Worldpay, Inc., its payments division that it acquired for $43 billion in 2019. The standalone entity is estimated to be worth about $25 billion after a $17.6 billion “goodwill impairment,” and Worldpay plans to reaccelerate its weak revenue and payments volume growth via acquisitions. That all sounds like good corporate governance. There’s just one problem: Worldpay is just a dozen payment companies in a trench coat pretending to be a single payments technology platform. Said another way, I don’t think their merger and acquisitions (M&A) strategy will work.

Worldpay is the final boss of payments M&A. The company is the result of a $10+ billion merger between U.S.-based Vantiv and UK-based Worldpay Group in 2017. Vantiv was the merchant services division spun off from Cincinnati-based Fifth Third Bancorp in 2009. London-based Worldpay Group was spun out of the Royal Bank of Scotland in 2010. Those companies were, in turn, the result of more than a dozen smaller M&A deals, starting in the 1990s. Here is an incomplete list of all the companies each entity acquired before their merger: