S&P puts Global Payments on positive watch

S&P said it placed the BB+ issuer credit rating on Global Payments Inc. on CreditWatch with positive implications, reflecting a view that the combined entity will have lower leverage and possess substantial free cash generating ability.

The agency said it expects to resolve the CreditWatch placement when the acquisition closes, likely in the second half of 2019.

Global Payments recently announced its intention to acquire Total System Services, Inc. in an all-stock transaction valued at about $21.5 billion, S&P said.

The agency said it expects the combined entity to generate pro forma net revenue of about $8.6 billion and EBITDA of about $3 billion, before cost synergies.

Given the substantial increase in scale, the acquisition will extend Global Payments' market position into the cash-generative card issuer processing business and combine with Total's fast growing merchant solutions segment, S&P said.

S&P said it will resolve the CreditWatch upon the consummation of the transaction, at which time it expects to raise the issuer credit rating on Global Payments by one notch to BBB-.

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