Global Payments' $4.3B Buy of Heartland Proves Small Biz Is a Big Deal
Global Payments and Heartland Payment Systems have a chance to create an international powerhouse focused on small to medium sized business, restaurant and education payments, if they can meld their technology post-acquisition and retain Heartland's management.
"You have [Heartland CEO] Robert Carr, the 'Steve Jobs' of the processor industry, at Heartland," said Richard Crone, a payments consultant. "He's very vocal and very focused on customer experience."
Global Payments on Tuesday entered into a $4.3 billion agreement to acquire Heartland, a deal it hopes to close in early 2016. Global Payments wants to leverage Heartland's expertise in technology combined with its own OpenEdge integration product, network and marketing capabilities. Global Payments also hopes to cross-sell Heartland's point of sale, payroll, loyalty and gift card solutions into Global Payments core U.S. and international markets augmented by deeper penetration into Heartland verticals such as restaurants and education payments. The combined company will provide payment products to about 2.5 merchants with revenue of about $3 billion.
"This will create the leading provider of integrated payments technology solutions worldwide, and positions our company as a leading provider of payments for small to medium sized businesses in the U.S.," said Jeff Sloan, CEO of Global Payments, in a conference call to discuss the acquisition, which is expected to close in the first half of 2016. "The combined company will have one of the highest rates of organic growth in the industry," Sloan said.
Carr and his management team are key pieces of the deal, Crone said. Carr is a very visible figure in the merchant acquiring business, and has been an advocate for ethical business practices. Carr has also been outspoken about what he sees as shortcomings in the industry, including at his own company after disclosing a massive data breach in 2009.
"Bob has experience with breaches and also is a thought leader with actual deployment experience with tokenization and security measures," Crone said, adding it's vital that Global Payments retain Carr and his team.
Global Payments and Heartland did not answer questions about staffing by deadline, though the two companies mentioned Heartland would operate in the U.S. under its existing brand and management, and Carr's comments indicated he plans to stay.
"It's a privilege to be here, Global Payments meets so many of my personal goals for the future," Carr said during the conference call, adding he was looking forward to expanding Heartland’s international sales capabilities.
Heartland’s mobile technology and partnership initiatives should meld well with Global Payments efforts such as expanding EMV and mobile payments and extending small business services in international markets such as Canada.
The challenge will be to integrate the two companies' technology systems into a single 'master' processing platform, a task that's often proven difficult in past processor mergers, Crone said.
Executives form the two companies did not provide details on how their platforms would work together, saying it was something they would examine over time. Sloan said that while there are synergies between the two companies, there is not a lot of overlap in revenue sources.
"Only with top-notch management can you pull this off, and Bob Carr is one of these people," Crone said. "Not only in character but demeanor."