FIS is set to integrate Worldpay into its business

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Fidelity National Information Services (FIS), a financial services technology company, reported earnings for Q2 2019, the last full quarter prior to its acquisition of payment processor Worldpay - valued at $43 billion - which closed on July 31. The quarter saw FIS individually bring in $2.1 billion in revenue, representing flat annual growth, while Worldpay racked up $1.1 billion in revenue, which was up 7% year-over-year (YoY).

FIS, with Worldpay in tow, will boast three new business segments that will aim to leverage the combined strengths of the companies.

• Merchant Solutions: The businesses that will comprise this segment posted $1.1 billion in revenue in Q2 2019, up 8% YoY, making it the fastest-growing of the three segments. Merchant Solutions will be led by Worldpay's former President and COO Mark Heimbouch, per FIS Chairman, President, and CEO Gary Norcross on the company's earnings call. FIS will use the Worldpay brand in this segment, and given the approximately 40 billion transactions Worldpay processes annually, it could find significant success, especially if combined with FIS' own offerings.
• Banking Solutions: This segment, which will offer cloud-based banking solutions as well as tools for issuer processing, was the biggest revenue driver in Q2 2019, bringing in $1.5 billion, but its annual growth was flat. An increase in noncash payments worldwide could boost this segment, and capabilities could be augmented by Worldpay's robust e-commerce offerings and wide processing reach.
• Capital Market Solutions: In Q2, this was the smallest of the three upcoming segments in terms of revenue - it posted $594 million in revenue, rising 2% YoY. While there are no immediately apparent opportunities for Worldpay to benefit this segment, it's possible FIS could find ways to leverage Worldpay's processes and technologies to bolster its capital market business.

As the recent spate of payments megadeals close, companies' ability to integrate their businesses and take advantage of each other's strengths will be key to their success. In addition to FIS' acquisition of Worldpay, Fiserv acquired First Data, and Global Payments is merging with TSYS - the combined deals amount to $86.5 billion.

The firms are looking to diversify their businesses through consolidation, but just bringing two companies under the same roof won't automatically maximize their value. Examining the existing businesses and finding opportunities where the capabilities of one complement or strengthen the other's can make the combined company more attractive than competitors.

This makes the early days of integration incredibly important because once new organizational segments and structures are created, they can be difficult to change quickly. Additionally, these integrations could influence whether partners from before the acquisitions and mergers elect to continue working with the combined companies; Bank of America already announced the end of its joint venture with First Data following that company's acquisition by Fiserv.

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