Global Payments Inc. GPN recently announced that it will acquire SICOM Systems, Inc., a leading provider of Enterprise Technology Solutions from LLR Partners. SICOM offers enterprise, cloud-based software as a service (SaaS) solutions and other such solutions to quick service and fast casual restaurants along with food service management providers around the globe.
Total valuation of the transaction is around $415 million, which Global Payments plans to pay in cash and existing credit facility. The deal is expected to culminate in the fourth quarter of 2018, subject to closing conditions.
This purchase aligns perfectly with the software-driven payments strategy of Global Payments and establishes the company as a leading provider in one of the largest addressable markets. With the acquirer providing market-leading technology solutions to a lot of restaurants, SICOM’s technologies are further expected to contribute and enrich its current Xenial solutions.
This transaction will allow Global Payments to enhance its software solutions platform and penetrate into the food service management industry, which is well-poised for growth with some of the most attractive core fundamentals.
The deal is expected to leave an immaterial impact on Global Payments’ 2018 financial results. This is yet another buyout of the company that would help it enrich its growth profile.
Recently, the company also announced the completion of its acquisition of AdvancedMD from Marlin Equity Partners. AdvanceMD is a leading provider of cloud-based software as a service or SaaS solutions to small-to-medium-sized physician practices in the United States. This consolidation was supposed to drive Global Payments’ technology-driven software-oriented scheme toward a 60% target set at its Investor Day in March.
The company has been actively working on its vertical strategy to boost its scale and size over the past several quarters. Among its flurry of M&A activities, the transaction of Heartland Payments Systems in 2016 has been the most significant. It helped contributing to its small and medium-sized enterprise distribution, customer base as well as fortified its vertical reach in the United States.
Other integrations such as the assets of FIS Gaming Business, Pay and Shop Limited, Ezidebit, PayPros, eWay, the communities and sports divisions of ACTIVE Network et al have also aided Global Payments’ business diversification.
Shares of this Zacks Rank #3 (Hold) company have surged 33.3%, underperforming its industry’s growth of 37%.
Stocks to Consider
A few better-ranked stocks from the same sector are Cardtronics PLC CATM, Visa Inc. V and Evertec, Inc. EVTC.
Cardtronics offers automated consumer financial services through its network of automated teller machines and multi-function financial services kiosks. This Zacks Rank #1 (Strong Buy) player managed to deliver an average trailing four-quarter beat of 40.72%. You can see the complete list of today’s Zacks #1 Rank stocks here.
Visa operates as a payments technology company worldwide. It carries a Zacks Rank #2 (Buy). In the preceding four quarters, the stock pulled off an average positive surprise of 9.27%.
EVERTEC engages in transaction processing business, serving financial institutions, merchants, corporations and government agencies in Latin America and the Caribbean. Carrying a Zacks Rank of 2, the company came up with an average earnings surprise of 11.84% over the last three of four quarters.
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