Cayan acquisition to expand TSYS capabilities, reach

TSYS, a leading payments issuer, acquirer and solutions provider, revealed plans to acquire Cayan LLC, a payment technology company. The all-cash transaction, valued at approximately $1.05 billion, was approved by TSYS' Board of Directors. TSYS executives expect the merger to improve the company's capabilities, market reach and top-line revenue. They shared details in a Dec. 17, 2017, conference call.

M. Troy Woods, Chairman, President and CEO at TSYS said Cayan provides "transformative innovations in payments," and said the acquisition "strategically complements our merchant goals to become a leading payments solutions provider to small and medium-sized businesses in the United States by delivering best-in-class services and solutions."

Henry Helgeson, co-founder and CEO at Cayan, added, "Cayan and TSYS are aligned in our strategy to provide cutting-edge payment solutions and a robust product offering to merchants across the U.S."

Consolidating assets

Woods expects Cayan's processor-agnostic Genius platform and Unified Commerce solutions to enable TSYS to broaden its product offerings, expand its partnership network reach, and add material scale to the company's small and midsize merchant segment.

Philip C. McHugh, Senior Executive Vice President and President of Merchant Solutions at TSYS, said 20 months after acquiring TransFirst, integrated platforms remain an important part of the company's topline growth strategy. Cayan is a technology company that scaled its small and midsize business (SMB) offerings and made the pivot to software, making the company an ideal acquisition target. McHugh said Cayan sealed the deal by meeting three merger and acquisition requirements:

1. Fast, organic growth: Cayan has an agile business model, with 70,000 active merchants, $26 billion in processing revenue, sound expense management and a proven record of strong, organic net revenue growth. As a scaled SMB player in the U.S. market, Cayan's culture of creativity and innovation and attractive financial profile will add material scale to TSYS and extend its sales and distribution reach, McHugh noted.

2. Innovation: McHugh noted Cayan's gateway is flexible, processor-agnostic, open platform that accepts all payment types, including EMV (Europay, Visa and Mastercard) and stored value transactions. The company's Genius platform meets 4 prerequisites: the software is easy to integrate, authentically omnichannel with card present and card not present processing, has strong security, reporting and loyalty functionality and is built on nimble, scalable and seamless technical architecture. These solutions provide strong integration opportunities.

3. People and culture: Cayan's complementary culture and capabilities will help TSYS penetrate high-growth vertical markets. "Henry is someone I've known for many years, very well-regarded in the industry and trusted, who recognized the need to pivot and become a true software company," McHugh added. "The combination of our scale and distribution with their product capabilities, we'll gain a competitive advantage."

TSYS Chief Financial Officer Paul Todd said he expects the deal to close in the first quarter of 2018, subject to regulatory approval and oversight. "We've entered into a definitive agreement to acquire 100 percent of Cayan," he stated. "The company's organic growth complements and accelerates TSYS' growth rate." Todd expressed confidence in the deal, saying he expects it to deliver double-digit growth, improved efficiencies and a meaningful cash tax benefit to TSYS.

A full transcript of the TSYS conference call and PowerPoint presentation is available at services.choruscall.com/links/tss17121818WJOXFs.html .

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