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Activist hedge fund Elliott Management has built a sizeable stake in Global Payments as the payment processing group looks to win back investors after its $24.2bn acquisition of Worldpay caused shares to plunge to a 10-year low, said people familiar with the matter.
The investment comes as the Atlanta-based payments group plots its future after buying Worldpay earlier this year in its biggest acquisition to date as it tries to grow its core business of processing payments for merchants.
The three-way, cash-and-shares acquisition with private equity group GTCR and financial technology company Fidelity Information Services came as a surprise to investors. It jarred with pledges from Global Payments’ management including at its 2024 investor day to focus on divestments and returning cash to shareholders.
Elliott’s demands and the size of its stake could not be established.
When the Worldpay deal was announced in April, shares in Global Payments fell 17.5 per cent on the day.
Although the stock has since rallied, its market capitalisation of $19bn means the company is trading at 7 times earnings, among the lowest levels across the industry.
Conversely, shares in rival FIS, which exited its 45 per cent stake in Worldpay and bought Global Payments’ issuer solutions business for $13.5bn as part of the deal, soared on the day.
In order to fund the deal, Global Payments trimmed its capital returns target between 2025 and 2027 from $7.5bn to $7bn, reversing course on its promise to prioritise share buybacks and dividends. It also announced plans to take on $7.7bn worth of debt financing just as fears of an economic slowdown grow.
Elliott cannot block the deal before it closes because the structure of the three-way agreement means it does not require a shareholder vote.
But, as a large investor, the fund could seek to influence how management and the board go about integrating Worldpay into the wider business.
Global Payments did not immediately respond to requests for comment. Elliott declined to comment.
Global Payments is among the payment processing companies with legacy technology systems that have been worst hit by competition from software-focused rivals such as Stripe, Adyen and Toast.
As part of a wave of consolidation across the sector in 2019, Global Payments and rivals Fiserv and FIS each struck their own megadeals, spending more than $90bn between them.
But investor sentiment around most of those acquisitions soured, leading several of the deals to be unwound. Fiserv’s $22bn all-stock acquisition of First Data stands out as a rare example of a deal investors welcomed.
Elliott, with $72.7bn of assets under management, is Wall Street’s best-known activist hedge fund, having unveiled high-profile investments at groups including BP and Hewlett Packard Enterprise this year.
The fund, founded by billionaire investor Paul Singer, has invested in a large number of technology stocks, including fintech companies such as PayPal and FIS, according to regulatory filings.
At an investor conference in May, Global Payments’ chief executive Cameron Bready blamed the poor reaction to the Worldpay acquisition on the deal landing in the immediate aftermath of US President Donald Trump’s tariff policy upending markets.
“Certainly it’s not lost on us that the timing, perhaps from a market standpoint, wasn’t ideal,” Bready said.
He added: “There’s not a scenario that I contemplate where we’re not better off by doing this transaction than we were obviously continuing forward with our standalone plan.”