CMA Initiates Formal Investigation into Global Payments–Worldpay Acquisition

The UK’s Competition and Markets Authority (CMA) has formally launched a Phase 1 investigation into Global Payments' planned $24.25 billion acquisition of Worldpay. This regulatory scrutiny introduces significant uncertainty for a major consolidation event within the global payments industry, as the CMA assesses potential impacts on competition in the United Kingdom.

The Event in Detail

The formal probe, which commenced its statutory review period on September 17, requires the CMA to issue a decision by November 11. At this juncture, the authority will either clear the transaction or refer it to a more extensive Phase 2 investigation. This development follows a preliminary request for public input issued in July, where the CMA initially signaled its interest in the proposed tie-up.

The acquisition, initially announced in April, involves Global Payments purchasing Worldpay from Fidelity National Information Services (FIS) and private equity firm GTCR. The net purchase price for Worldpay stands at $22.7 billion, contributing to a total deal value of $24.25 billion. As part of the broader transaction, Global Payments concurrently arranged the divestiture of its Issuer Solutions division to FIS for $13.5 billion. The strategic rationale behind the merger is to combine Worldpay’s established strength in online and enterprise transactions with Global Payments’ focus on small to mid-sized businesses, aiming to create a dominant entity capable of processing an estimated 94 billion transactions annually across more than 175 countries.

Analysis of Market Reaction

The CMA’s decision to advance to a formal review underscores heightened regulatory concerns regarding potential adverse effects on competition within the UK payments industry. This action could lead to increased volatility for shares of Global Payments (GPN) and FIS. While the combined entity is projected to generate approximately $12.5 billion in adjusted net revenue and $6.5 billion in adjusted core earnings, the regulatory hurdle introduces a notable risk premium.

Experts suggest that the formal probe indicates the CMA’s apprehension that this union could create an unfair advantage in payment processing markets. If realized, the combined firm