Atlanta-based Global Payments Inc. disclosed Dec. 15, 2015, that it plans to acquire Heartland Payment Systems Inc., confirming rumors that had been circulating for days in the payments community. Senior executives from both companies hailed the merger as a defining moment in payments history and a major leap forward for the two leading industry brands.
"This partnership with Heartland marks a major milestone for our company, significantly enhancing our direct presence in our largest market and transforming Global Payments into the leading provider of integrated payments technology in the world," said Jeffrey Sloan, Global's Chief Executive Officer. "The combination of strong businesses and cultures in high growth markets will generate exceptional opportunities for our employees, customers, partners and shareholders worldwide."
As he reflected on his company's 18-year history, Heartland Chairman and CEO Robert O. Carr echoed Sloan's sentiment. "Under Jeff's leadership, I believe the combination of our companies will become the most valuable payments company on the planet," he said. "In the U.S., Heartland will continue to operate under its own brand and under its business model of fair dealing, with the Merchant Bill of Rights and the Sales Professional Bill of Rights guiding the way to future growth and innovation."
Share prices at both companies have been predictably volatile following the public statement. Global Payments, trading under symbol GPN in the New York Stock Exchange, reached a 52-week high of 74.64 in November; shares were priced below $65 on Dec. 17. Heartland shares, also listed on NYSE, peaked in December at $95.50 and were priced at $94.61 during Dec. 17 mid-day trading.
The movement of the stock prices led some payments analysts to speculate that Global may have overpaid for Heartland. In a combination cash and stock deal, Global intends to pay $100 per Heartland share, according to the definitive agreement.
On the other hand, the law firm Rigrodsky & Long P.A. questioned whether Global is paying enough for Heartland. It issued a shareholder alert on Dec. 16, stating it was investigating potential legal claims against Heartland regarding potential breaches of fiduciary duties. "The investigation concerns whether Heartland's board of directors failed to adequately shop the Company and obtain the best possible value for Heartland's shareholders before entering into an agreement with Global Payments," the law firm stated in its alert.
In the wake of the shareholder alert, national securities firm Faruqi & Faruqi LLP said it is investigating Heartland's board of directors. The investigation focuses on whether board members breached their fiduciary duties to the company's stockholders by failing to conduct a fair sales process and whether the proposed transaction undervalues the company.
Undeterred, the companies expect the deal, valued at $4.3 billion, to close in the first quarter of 2016.
Carr cited the Merchant Bill of Rights and Sales Professional Bill of Rights in his public statement about the acquisition; both are considered a key part of his legacy. He expects their guiding principles to live on in the new company and to be broadly embraced as payments industry standards.
Heartland established the Merchant Bill of Rights in 2006, under Carr's leadership, in an effort to raise the level of professionalism and accountability in the merchant services profession. Its stated purpose is "to enable merchants who don't have the resources of large purchasing organizations to effectively manage their costs, determine which processor best meets their needs and realize significant savings."
Heartland's Sales Professional Bill of Rights was established in 2012, following the success of the company's Merchant Bill of Rights. The initiative has a similar premise of promoting transparency and merchant advocacy.
Global, a worldwide provider of payment technology services, employs approximately 4,500 people worldwide. It has partners in 29 countries, including North America, Europe, the Asia-Pacific region and Brazil.
Heartland, headquartered in Princeton, N.J., is the fifth largest payment processor in the United States. The company has excelled in select vertical industries including universities, laundromats and self-attended kiosks. Its focus on cutting-edge technology includes mobile commerce, e-commerce, payment security and payroll solutions. While Heartland will continue to operate as its own brand for the foreseeable future, industry specialists believe the merger with Global will benefit both companies. The proposed deal will blend Heartland's expertise in small to midsize merchant solutions with Global's international market presence and expertise in mobile payments and Europay, MasterCard and Visa technologies, analysts stated.
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