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Table of Contents

Lead Story

Cash: tomorrow's currency or yesterday's paper?

Dale S. Laszig

News

Industry Update

Visa says Level 4 merchants must use PCI-accredited QIRs

TransFirst finds new home: TSYS

Blackhawk, an omnichannel force in prepaid

NRF celebrates mobile, EMV milestones

Features

Many benefits to incorporation

Selling Prepaid

NEAA delivers again in Boston

More enterprises stepping into mobile

Views

Expanding possibilities with pocket banking

Patti Murphy
ProScribes inc.

Education

Street SmartsSM:
Essential thoughts on 'additional' services

Jeffrey I. Shavitz
TrafficJamming LLC

The one man show: W-2 versus 1099

John Tucker
1st Capital Loans LLC

The autobahnen, autoroutes and motorways of European payments

Christoph Tutsch
Onpex GmbH

Make 2016 the year of the profit

Jeff Fortney
Clearent LLC

2015 Acquiring Mergers and Acquistions in Retrospet

Company Profile

Lead Tracking Systems LLC

New Products

Leave a perfect voicemail every time

Voice Mail Drop
Integrated Reporting is Simple LLC

Next-generation touch screen tablet POS

SP-2500 POS PC, EM-300 tablet
Partner Tech Corp.

Inspiration

Tune up your presentation

Departments

Letter From the Editors

Readers Speak

Boost Your Biz: Verbal appeal

ISO Metrics: What's up in banking and payments?

Resource Guide

Datebook

A Bigger Thing

The Green Sheet Online Edition

February 08, 2016  •  Issue 16:02:01

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TransFirst finds new home: TSYS

Leading acquirer Total System Services Inc. (TSYS) revealed its intention to acquire TransFirst Holdings LLC for $2.35 billion. If approved, the transaction would make TSYS the eighth-largest merchant acquirer in the United States, with nearly 600,000 merchant locations generating $90 billion a year in bankcard payments, according to an analysis by First Annapolis Consulting.

First Annapolis noted that the acquisition, which still requires regulatory approvals, is the third-largest combination of acquirers since 2009. It is also the second combination of leading merchant acquirers to be disclosed in recent weeks. Global Payments Inc. stated in December 2015 that it would pay $4.3 billion to acquire Heartland Payment Systems Inc. That deal is expected to establish Global as the sixth largest acquirer, with 996,300 U.S. merchant outlets and $234.2 billion in yearly U.S. bankcard volume, based on 2014 data, First Annapolis said.

"TransFirst significantly increases our scale and opportunity within the highly attractive merchant space, and particularly the profitable and fast-growing small and medium-sized business segment," said Troy Woods, Chairman, President and Chief Executive Officer of TSYS. With the added strength of TransFirst, TSYS will be uniquely positioned with significant scale and strength across issuer processing, merchant services and prepaid program management.

Woods added that the deal would also help bolster the TSYS' position in high-growth areas like e-commerce, omnichannel services and integrated payments. TransFirst, for example, works with more than 1,300 integrated technology and referral partners; among them are integrated software vendors, e-commerce companies, referral banks and others.

Market uncertainties

The initial market response to news of the TSYS-TransFirst combination was less than overwhelming. Shares of TSYS were down the morning of Jan. 27, 2015, by as much as 11.78 percent. Also, Standard and Poor's Ratings Services lowered its credit and debt ratings on TSYS by two levels, from BBB+ to BBB-, after the company had to borrow money to complete the purchase, according to a report by Bloomberg.

TransFirst has operated under various corporate monikers, including ACS Merchant Services, and is owned by the private equity firm Vista Equity Partners, which as recently as October 2015 was readying the company for an initial public offering. Vista purchased TransFirst from Welsh, Carson, Anderson & Stowe in 2014, reportedly for $1.5 billion, scuttling Welsch Carson's IPO plans for TransFirst.

An analysis of TransFirst's latest planned IPO, posted in October 2015 at Seeking Alpha, indicated the company had over $1.1 billion in long-term debt. "TransFirst would easily be turning positive earnings if it wasn't for the huge burden of debt," wrote Nicholas Durante, Research Analyst with Celestial Market Research. "However, with that debt you get significant growth," he said, adding that they "are on track for almost $1.6 billion in revenue for 2015," which would represent a 68 percent increase from 2012 to 2015.

Notice to readers: These are archived articles. Contact names or information may be out of date. We regret any inconvenience.

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Spotlight Innovators:

USAePay | Impact Paysystems | Electronic Merchant Systems | Inovio | Board Studios, Inc.