Form S-4
Table of Contents

As filed with the Securities and Exchange Commission on July 3, 2019

Registration No. 333-            

 

 

 

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM S-4

REGISTRATION STATEMENT

Under

THE SECURITIES ACT OF 1933

 

 

Global Payments Inc.

(Exact name of Registrant as specified in its charter)

 

 

 

Georgia   7389   58-2567903

(State or other jurisdiction of

incorporation or organization)

 

(Primary Standard Industrial

Classification Code Number)

 

(I.R.S. Employer

Identification No.)

3550 Lenox Road

Atlanta, Georgia 30326

(770) 829-8000

(Address, including zip code, and telephone number, including area code, of Registrant’s principal executive offices)

 

 

David L. Green

Executive Vice President, General Counsel and Corporate Secretary

Global Payments Inc.

3550 Lenox Road

Atlanta, Georgia 30326

Phone: (770) 829-8256

(Name, address, including zip code, and telephone number, including area code, of agent for service)

 

 

Copies to:

 

Edward D. Herlihy

Jacob A. Kling

Wachtell, Lipton, Rosen & Katz

51 West 52nd Street

New York, New York 10019

(212) 403-1000

 

G. Sanders Griffith, III

Senior Executive Vice President, General

Counsel and Secretary

Total System Services, Inc.

One TSYS Way

Columbus, Georgia 31901

(706) 649-2267

 

James C. Woolery

Keith M. Townsend

King & Spalding LLP

1185 Avenue of the Americas

New York, New York 10036

(212) 556-2100

 

 

Approximate date of commencement of proposed sale of the securities to the public: As soon as practicable after this Registration Statement is declared effective and upon completion of the merger described herein.

If the securities being registered on this Form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box.  ☐

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer      Accelerated filer  
Non-accelerated filer      Smaller reporting company  
     Emerging growth company  

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act.  ☐

If applicable, place an X in the box to designate the appropriate rule provision relied upon in conducting this transaction:

Exchange Act Rule 13e-4(i) (Cross-Border Issuer Tender Offer)  ☐

Exchange Act Rule 14d-1(d) (Cross-Border Third-Party Tender Offer)  ☐

 

 

CALCULATION OF REGISTRATION FEE

 

 

 

Title of each class of

securities to be registered

  Amount
to be
registered
 

Proposed

maximum
offering price
per share

 

Proposed

maximum
aggregate
offering price

  Amount of
registration fee

Common Stock, without par value

  146,451,448(1)   N/A   $23,181,667,910.00(2)   $2,809,618.16(3)

 

 

 

(1)

The number of shares of common stock, without par value, of Global Payments Inc. (“Global Payments” and such shares, the “Global Payments common stock”) being registered is based upon an estimate of (x) the maximum number of shares of common stock, par value $0.10 per share, of Total System Services, Inc. (“TSYS” and such shares, the TSYS common stock”) outstanding as of June 28, 2019 or issuable or expected to be exchanged in connection with the merger of TSYS with and into Global Payments, including shares of TSYS common stock that may be issuable in respect of outstanding TSYS equity awards, collectively equal to 180,781,938, multiplied by (y) the exchange ratio of 0.8101 shares of Global Payments common stock for each share of TSYS common stock.

(2)

Estimated solely for the purpose of calculating the registration fee required by Section 6(b) of the Securities Act of 1933, as amended (the “Securities Act”) and calculated in accordance with Rules 457(c) and 457(f)(1) promulgated thereunder. The aggregate offering price is (x) the average of the high and low prices of TSYS common stock as reported on the New York Stock Exchange on June 28, 2019 ($128.23) multiplied by (y) the estimated maximum number of shares of TSYS common stock to be converted in the merger (180,781,938).

(3)

Calculated by multiplying the estimated aggregate offering price of securities to be registered by 0.0001212.

 

 

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION ACTING PURSUANT TO SAID SECTION 8(a) MAY DETERMINE.

 

 

 


Table of Contents

The information in this joint proxy statement/prospectus is not complete and may be changed. A registration statement relating to the securities described in this joint proxy statement/prospectus has been filed with the U.S. Securities and Exchange Commission. These securities may not be issued until the registration statement filed with the U.S. Securities and Exchange Commission is effective. This joint proxy statement/prospectus does not constitute an offer to sell or the solicitation of offers to buy these securities in any jurisdiction where the offer or sale is not permitted.

 

PRELIMINARY—SUBJECT TO COMPLETION—DATED JULY 3, 2019

 

LOGO    LOGO

To the shareholders of Global Payments Inc. and Total System Services, Inc.

MERGER PROPOSED—YOUR VOTE IS VERY IMPORTANT

On behalf of the boards of directors of Global Payments Inc. (“Global Payments”) and Total System Services, Inc. (“TSYS”), we are pleased to enclose the accompanying joint proxy statement/prospectus relating to the proposed merger between Global Payments and TSYS. We are requesting that you take certain actions as a holder of Global Payments common stock or a holder of TSYS common stock.

The boards of directors of Global Payments and TSYS have each unanimously approved an agreement to merge our two companies. Pursuant to the Agreement and Plan of Merger, dated as of May 27, 2019, by and between TSYS and Global Payments (as amended from time to time, the “merger agreement”), TSYS will merge with and into Global Payments (the “merger”), with Global Payments as the surviving entity (the “combined company”, or “Global Payments”, as the case may be).

The proposed merger will create the preeminent technology-enabled payments company at scale in the largest and most attractive financial technology markets worldwide. Combined, Global Payments and TSYS will provide innovative payments and software solutions to approximately 3.5 million predominantly small to mid-sized merchant locations and more than 1,300 financial institutions across more than 100 countries. TSYS will also substantially expand Global Payments’ integrated payments and ecommerce and omnichannel solutions businesses in the United States and provide further opportunities for meaningful multinational omnichannel market share gains. Finally, Global Payments will have exposure to some of the fastest growing digital payments trends through TSYS’ issuer and consumer solutions businesses.

In the merger, holders of TSYS common stock will receive 0.8101 shares (the “exchange ratio” and such shares, the “merger consideration”) of Global Payments common stock for each share of TSYS common stock they own. Holders of Global Payments common stock will continue to own their existing shares of Global Payments common stock. Based on the closing price of Global Payments common stock on the New York Stock Exchange (“NYSE”) on May 23, 2019, the last full trading day before the publication of news reports relating to a potential transaction between Global Payments and TSYS, the exchange ratio represented approximately $119.86 in value for each share of TSYS common stock. Based on Global Payments’ closing price on [                ], 2019 of $[        ], the last practicable trading day before the date of the accompanying joint proxy statement/prospectus, the exchange ratio represented approximately $[        ] in value for each share of TSYS common stock. The value of the Global Payments common stock at the time of completion of the merger could be greater than, less than or the same as the value of Global Payments common stock on the date of the accompanying joint proxy statement/prospectus. We urge you to obtain current market quotations of Global Payments common stock (trading symbol “GPN”) and TSYS common stock (trading symbol “TSS”).

Based on the current number of shares of TSYS common stock outstanding and reserved for issuance, Global Payments expects to issue approximately 143.4 million shares of Global Payments common stock to holders of TSYS common stock in the aggregate in the merger. Following the completion of the merger, we estimate that former holders of TSYS common stock will own approximately forty-eight percent (48%) and former holders of Global Payments common stock will own approximately fifty-two percent (52%) of the fully diluted shares of the combined company.

The special meeting of holders of Global Payments common stock will be held on [        ] at [        ], at [        ] local time. The special meeting of holders of TSYS common stock will be held on [        ] at [        ], at [        ] local time. At our respective special meetings, in addition to other business, we will each ask our holders of common stock to approve the merger. Information about these meetings and the merger is contained in this joint proxy statement/prospectus. In particular, see the section entitled “Risk Factors” beginning on page [   ]. We urge you to read this joint proxy statement/prospectus carefully and in its entirety.

Whether or not you plan to attend your special meeting, please vote as soon as possible to make sure that your shares are represented at the meeting. If you do not vote, it will have the same effect as voting “AGAINST” the merger.

Each of our boards of directors unanimously recommends that holders of common stock vote “FOR” each of the proposals to be considered at the respective meetings. We strongly support this combination of our companies and join our boards in their recommendations.

 

LOGO

 

Jeffrey S. Sloan

Chief Executive Officer

Global Payments Inc.

  

LOGO

 

M. Troy Woods

Chairman, President and Chief Executive Officer

Total System Services, Inc.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of the securities to be issued in connection with the merger or determined if this joint proxy statement/prospectus is accurate or complete. Any representation to the contrary is a criminal offense.

The accompanying joint proxy statement/prospectus is dated [                ], 2019, and is first being mailed to holders of Global Payments common stock and holders of TSYS common stock on or about [                ], 2019.


Table of Contents

ADDITIONAL INFORMATION

The accompanying joint proxy statement/prospectus incorporates important business and financial information about Global Payments and TSYS from other documents that are not included in or delivered with this joint proxy statement/prospectus. This information is available to you without charge upon your written or oral request. You can obtain the documents incorporated by reference in this joint proxy statement/prospectus through the Securities and Exchange Commission website at http://www.sec.gov or by requesting them in writing or by telephone at the appropriate address below:

 

if you are a Global Payments shareholder:

Global Payments Inc.

3550 Lenox Road

Atlanta, Georgia 30326

(770) 829-8478

Attn: Investor Relations

  

if you are a TSYS shareholder:

Total System Services, Inc.

P.O. Box 2567

Columbus, Georgia 31902

(706) 644-6081

Attn: Vice President of Investor Relations

You will not be charged for any of these documents that you request. To obtain timely delivery of these documents, you must request them no later than five (5) business days before the date of the applicable special meeting. This means that holders of Global Payments common stock requesting documents must do so by [    ], to receive them before the Global Payments special meeting, and holders of TSYS common stock requesting documents must do so by [    ], to receive them before the TSYS special meeting.

No one has been authorized to provide you with information that is different from that contained in, or incorporated by reference into, this joint proxy statement/prospectus. This joint proxy statement/prospectus is dated [    ], 2019, and you should assume that the information in this joint proxy statement/prospectus is accurate only as of such date. You should assume that the information incorporated by reference into this joint proxy statement/prospectus is accurate as of the date of such incorporated document. Neither the mailing of this joint proxy statement/prospectus to holders of Global Payments common stock or holders of TSYS common stock nor the issuance by Global Payments of shares of Global Payments common stock in connection with the merger will create any implication to the contrary.

This joint proxy statement/prospectus does not constitute an offer to sell, or a solicitation of an offer to buy, any securities, or the solicitation of a proxy, in any jurisdiction to or from any person to whom it is unlawful to make any such offer or solicitation in such jurisdiction. Information contained in, or incorporated by reference into, this joint proxy statement/prospectus regarding Global Payments has been provided by Global Payments and information contained in, or incorporated by reference into, this joint proxy statement/prospectus regarding TSYS has been provided by TSYS.

See the section entitled “Where You Can Find More Information” beginning on page [    ] of the accompanying joint proxy statement/prospectus for further information.


Table of Contents

LOGO

Global Payments Inc.

3550 Lenox Road

Atlanta, Georgia 30326

Notice of Special Meeting of Shareholders

To the Shareholders of Global Payments Inc.:

On May 27, 2019, Global Payments Inc. (“Global Payments”) and Total System Services, Inc. (“TSYS”) entered into an Agreement and Plan of Merger (as amended from time to time, the “merger agreement”), a copy of which is attached as Annex A to the accompanying joint proxy statement/prospectus.

NOTICE IS HEREBY GIVEN that a special meeting of holders of Global Payments common stock (the “Global Payments special meeting”) will be held on [                        ], 2019 at [        ], local time at [        ]. We are pleased to notify you of and invite you to the Global Payments special meeting.

At the Global Payments special meeting you will be asked to vote on the following matters:

 

   

Proposal to approve the merger agreement (the “Global Payments merger proposal”).

 

   

Proposal to approve an amendment to Global Payments’ articles of incorporation to increase the number of authorized shares of Global Payments common stock from two hundred million shares to four hundred million shares (such amendment, the “Global Payments authorized share count articles amendment” and such proposal, the “Global Payments authorized share count proposal”), a copy of which is attached as Annex F to the accompanying joint proxy statement/prospectus.

 

   

Proposal to approve an amendment to Global Payments’ articles of incorporation to declassify the Global Payments board of directors and provide for annual elections of directors (such amendment, the “Global Payments declassification articles amendment” and such proposal, the “Global Payments declassification proposal”), a copy of which is attached as Annex G to the accompanying joint proxy statement/prospectus.

 

   

Proposal to adjourn the Global Payments special meeting, if necessary or appropriate, to solicit additional proxies if, immediately prior to such adjournment, there are not sufficient votes to approve the Global Payments merger proposal, the Global Payments authorized share count proposal or the Global Payments declassification proposal or to ensure that any supplement or amendment to the accompanying joint proxy statement/prospectus is timely provided to holders of Global Payments common stock (the “Global Payments adjournment proposal”).

The Global Payments board of directors has fixed the close of business on [                    ], 2019 as the record date for the Global Payments special meeting. Only holders of record of Global Payments common stock as of the close of business on the record date for the Global Payments special meeting are entitled to notice of, and to vote at, the Global Payments special meeting or any adjournment or postponement thereof.

The Global Payments board of directors unanimously recommends that holders of Global Payments common stock vote “FOR” the Global Payments merger proposal, “FOR” the Global Payments authorized share count proposal, “FOR” the Global Payments declassification proposal and “FOR” the Global Payments adjournment proposal.

Your vote is important. We cannot complete the transactions contemplated by the merger agreement unless holders of Global Payments common stock approve the merger agreement. The affirmative vote of a majority of all the votes entitled to be cast on the merger agreement by the holders of Global Payments common stock is required to approve the Global Payments merger proposal.


Table of Contents

Whether or not you plan to attend the Global Payments special meeting, we urge you to please promptly complete, sign, date and return the accompanying proxy card in the enclosed postage-paid envelope or authorize the individuals named on the accompanying proxy card to vote your shares by calling the toll-free telephone number or by using the Internet as described in the instructions included with the accompanying proxy card. If your shares are held in the name of a bank, broker or other nominee, please follow the instructions on the voting instruction card furnished by such bank, broker or other nominee.

By Order of the Board of Directors

 

LOGO

David L. Green

Executive Vice President,

General Counsel and Corporate Secretary

[                    ], 2019


Table of Contents

LOGO

Total System Services, Inc.

One TSYS Way

Columbus, Georgia 31901

Notice of Special Meeting of Shareholders

To the Shareholders of Total System Services, Inc.:

On May 27, 2019, Global Payments Inc. (“Global Payments”) and Total System Services, Inc. (“TSYS”) entered into an Agreement and Plan of Merger (as amended from time to time, the “merger agreement”), a copy of which is attached as Annex A to the accompanying joint proxy statement/prospectus.

NOTICE IS HEREBY GIVEN that a special meeting of holders of TSYS common stock (the “TSYS special meeting”) will be held on [                ], 2019 at [        ], local time at [        ]. We are pleased to notify you of and invite you to the TSYS special meeting. The purpose of the TSYS special meeting is to consider and vote upon the following matters:

 

   

Proposal to approve the merger agreement (the “TSYS merger proposal”).

 

   

Proposal to approve, on an advisory (non-binding) basis, the executive officer compensation that will or may be paid to TSYS’ named executive officers in connection with the transactions contemplated by the merger agreement (the “TSYS compensation proposal”).

 

   

Proposal to approve, on an advisory (non-binding) basis, an amendment to Global Payments’ articles of incorporation to declassify Global Payments’ board of directors and provide for the annual election of directors (the “TSYS declassification proposal”).

 

   

Proposal to adjourn the TSYS special meeting, if necessary or appropriate, to solicit additional proxies if, immediately prior to such adjournment, there are not sufficient votes to approve the TSYS merger proposal or to ensure that any supplement or amendment to the accompanying joint proxy statement/prospectus is timely provided to holders of TSYS common stock (the “TSYS adjournment proposal”).

The TSYS board of directors has fixed the close of business on [                ], 2019 as the record date for the TSYS special meeting. Only holders of record of TSYS common stock as of the close of business on the record date for the TSYS special meeting are entitled to notice of, and to vote at, the TSYS special meeting or any adjournment or postponement thereof.

Holders of TSYS common stock are not entitled to dissenters’ rights with respect to the proposed merger under Article 13 of the Georgia Business Corporation Code.

The accompanying joint proxy statement/prospectus describes the merger and the actions to be taken in connection with the merger and provides additional information about the parties involved. Please give this information your careful attention.

The TSYS board of directors unanimously recommends that holders of TSYS common stock vote “FOR” the TSYS merger proposal, “FOR” the TSYS compensation proposal, “FOR” the TSYS declassification proposal and “FOR” the TSYS adjournment proposal.

Your vote is important. We cannot complete the transactions contemplated by the merger agreement unless holders of TSYS common stock approve the merger agreement. The affirmative vote of a majority of all the votes entitled to be cast on the merger agreement by the holders of TSYS common stock is required to approve the TSYS merger proposal.


Table of Contents

Whether or not you plan to attend the TSYS special meeting, we urge you to please promptly complete, sign, date and return the accompanying proxy card in the enclosed postage-paid envelope or authorize the individuals named on the accompanying proxy card to vote your shares by calling the toll-free telephone number or by using the Internet as described in the instructions included with the accompanying proxy card. If your shares are held in the name of a bank, broker or other nominee, please follow the instructions on the voting instruction card furnished by such bank, broker or other nominee.

By Order of the Board of Directors

 

 

LOGO

G. Sanders Griffith, III

Senior Executive Vice President,

General Counsel and Corporate Secretary


Table of Contents

TABLE OF CONTENTS

 

     Page  

TABLE OF CONTENTS

     i  

QUESTIONS AND ANSWERS

     1  

SUMMARY

     12  

The Parties to the Merger

     12  

The Merger and the Merger Agreement

     13  

Exchange Ratio

     13  

Treatment of TSYS Equity Awards

     14  

Treatment of TSYS ESPP

     14  

Material U.S. Federal Income Tax Consequences

     14  

Global Payments’ Reasons for the Merger; Recommendation of Global Payments’ Board of Directors

     14  

TSYS’ Reasons for the Merger; Recommendation of TSYS’ Board of Directors

     15  

Opinions of Global Payments’ Financial Advisors

     15  

Opinions of TSYS’ Financial Advisors

     16  

Appraisal or Dissenters’ Rights in the Merger

     17  

Interests of Global Payments’ Directors and Executive Officers in the Merger

     17  

Interests of TSYS’ Directors and Executive Officers in the Merger

     17  

Governance of the Combined Company After the Merger

     17  

Regulatory Approvals

     20  

Description of Financing

     20  

Expected Timing of the Merger

     21  

Conditions to Completion of the Merger

     21  

Termination of the Merger Agreement

     22  

Termination Fee

     23  

Accounting Treatment

     23  

The Rights of Holders of TSYS Common Stock Will Change as a Result of the Merger

     23  

Listing of Global Payments Common Stock; Delisting and Deregistration of TSYS Common Stock

     23  

The Global Payments Special Meeting

     24  

The TSYS Special Meeting

     24  

Risk Factors

     25  

SELECTED CONSOLIDATED HISTORICAL FINANCIAL DATA OF GLOBAL PAYMENTS

     26  

SELECTED CONSOLIDATED HISTORICAL FINANCIAL DATA OF TSYS

     28  

SELECTED UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

     30  

COMPARATIVE HISTORICAL AND UNAUDITED PRO FORMA PER SHARE DATA

     31  

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

     33  

RISK FACTORS

     35  

THE GLOBAL PAYMENTS SPECIAL MEETING

     41  

Date, Time and Place of the Meeting

     41  

 

-i-


Table of Contents
     Page  

Matters to Be Considered

     41  

Recommendation of Global Payments’ Board of Directors

     41  

Record Date and Quorum

     41  

Broker Non-Votes

     42  

Vote Required; Treatment of Abstentions, Broker Non-Votes and Failure to Vote

     42  

Attending the Special Meeting

     43  

Proxies

     43  

Shares Held in Street Name

     43  

Revocability of Proxies

     44  

Delivery of Proxy Materials

     44  

Solicitation of Proxies

     44  

Other Matters to Come Before the Global Payments Special Meeting

     45  

Assistance

     45  

GLOBAL PAYMENTS PROPOSALS

     46  

Proposal 1: Global Payments Merger Proposal

     46  

Proposal 2: Global Payments Authorized Share Count Proposal

     46  

Proposal 3: Global Payments Declassification Proposal

     47  

Proposal 4: Global Payments Adjournment Proposal

     48  

THE TSYS SPECIAL MEETING

     49  

Date, Time and Place of the Meeting

     49  

Matters to be Considered

     49  

Recommendation of TSYS’ Board of Directors

     49  

Record Date and Quorum

     49  

Broker Non-Votes

     49  

Vote Required; Treatment of Abstentions, Broker Non-Votes and Failure to Vote

     50  

Attending the Special Meeting

     51  

Proxies

     51  

Shares Held in Street Name

     51  

Revocability of Proxies

     52  

Delivery of Proxy Materials

     52  

Solicitation of Proxies

     52  

Other Matters to Come Before the TSYS Special Meeting

     53  

Assistance

     53  

TSYS PROPOSALS

     54  

Proposal 1: TSYS Merger Proposal

     54  

Proposal 2: TSYS Compensation Proposal

     54  

Proposal 3: TSYS Declassification Proposal

     54  

Proposal 4: TSYS Adjournment Proposal

     55  

INFORMATION ABOUT GLOBAL PAYMENTS

     57  

INFORMATION ABOUT TSYS

     58  

 

-ii-


Table of Contents
     Page  

THE MERGER

     59  

Terms of the Merger

     59  

Background of the Merger

     59  

Global Payments’ Reasons for the Merger; Recommendation of Global Payments’ Board of Directors

     69  

Opinions of Global Payments’ Financial Advisors

     73  

TSYS’ Reasons for the Merger; Recommendation of TSYS’ Board of Directors

     95  

Opinions of TSYS’ Financial Advisors

     99  

Certain Unaudited Prospective Financial Information

     122  

Interests of Global Payments’ Directors and Executive Officers in the Merger

     126  

Interests of TSYS’ Directors and Executive Officers in the Merger

     127  

Governance of the Combined Company After the Merger

     133  

Accounting Treatment

     136  

Regulatory Approvals

     136  

Description of Financing

     138  

Stock Exchange Listings

     140  

Appraisal or Dissenters’ Rights in the Merger

     140  

THE MERGER AGREEMENT

     141  

MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER

     162  

Tax Consequences of the Merger Generally

     163  

Information Reporting and Backup Withholding

     164  

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

     165  

UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET

     167  

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENTS OF INCOME

     168  

NOTES TO THE UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

     170  

DESCRIPTION OF GLOBAL PAYMENTS CAPITAL STOCK

     179  

Common Stock

     179  

Preferred Stock

     179  

Miscellaneous

     180  

Transfer Agent and Registrar

     180  

Certain Anti-Takeover Provisions

     180  

COMPARISON OF SHAREHOLDERS’ RIGHTS

     183  

LEGAL MATTERS

     196  

EXPERTS

     196  

DEADLINES FOR SUBMITTING SHAREHOLDER PROPOSALS

     197  

WHERE YOU CAN FIND MORE INFORMATION

     199  

Annex A – Agreement and Plan of Merger

     A-1  

Annex B – Opinion of BofA Securities, Inc.

     B-1  

Annex C – Opinion of J.P. Morgan Securities LLC

     C-1  

Annex D – Opinion of Greenhill & Co., LLC

     D-1  

 

-iii-


Table of Contents
     Page  

Annex E – Opinion of Goldman, Sachs & Co. LLC

     E-1  

Annex F – Form of Global Payments Authorized Share Count Articles Amendment

     F-1  

Annex G – Form of Global Payments Declassification Articles Amendment

     G-1  

PART II INFORMATION NOT REQUIRED IN PROSPECTUS

     II-1  

Item 20.     Indemnification of Directors and Officers

     II-1  

Item 21.     Exhibits and Financial Statement Schedules

     II-2  

Item 22.    Undertakings

     II-3  

 

-iv-


Table of Contents

QUESTIONS AND ANSWERS

The following are some questions that you may have about the merger and the Global Payments special meeting or the TSYS special meeting, and brief answers to those questions. We urge you to read carefully the remainder of this joint proxy statement/prospectus because the information in this section does not provide all of the information that might be important to you with respect to the merger and the Global Payments special meeting or the TSYS special meeting. Additional important information is also contained in the documents incorporated by reference into this joint proxy statement/prospectus. See the section entitled “Where You Can Find More Information” beginning on page [    ].

In this joint proxy statement/prospectus, unless the context otherwise requires:

 

   

“Global Payments” refers to Global Payments Inc.;

 

   

“Global Payments common stock” refers to the common stock of Global Payments, without par value;

 

   

“TSYS” refers to Total System Services, Inc.; and

 

   

“TSYS common stock” refers to the common stock of TSYS, par value $0.10 per share.

 

Q:

Why am I receiving this joint proxy statement/prospectus?

 

A:

You are receiving this joint proxy statement/prospectus because Global Payments and TSYS have agreed to combine their companies in a merger of equals structured through the merger of TSYS with and into Global Payments (the “merger”), with Global Payments as the surviving entity (the “combined company”, or “Global Payments”, as the case may be). A copy of the Agreement and Plan of Merger, dated as of May 27, 2019, by and between TSYS and Global Payments (the “merger agreement”) is attached as Annex A to this joint proxy statement/prospectus and is incorporated by reference herein.

To complete the merger, among other things:

 

   

holders of Global Payments common stock must approve (1) the merger agreement (the “Global Payments merger proposal”) and (2) an amendment to Global Payments’ articles of incorporation to increase the number of authorized shares of Global Payments common stock from two hundred million shares to four hundred million shares (such amendment, the “Global Payments authorized share count articles amendment” and such proposal, the “Global Payments authorized share count proposal”); and

 

   

holders of TSYS common stock must approve the merger agreement (the “TSYS merger proposal”).

Global Payments is holding a special meeting of holders of Global Payments common stock (the “Global Payments special meeting”), to obtain approval of the Global Payments merger proposal and the Global Payments authorized share count proposal. Holders of Global Payments common stock will also be asked (1) to approve an amendment to Global Payments’ articles of incorporation to declassify the Global Payments board of directors and provide for annual elections of directors (such amendment, the “Global Payments declassification articles amendment” and such proposal, the “Global Payments declassification proposal”) and (2) to approve the proposal to adjourn the Global Payments special meeting, if necessary or appropriate, to solicit additional proxies if there are not sufficient votes at the time of the Global Payments special meeting to approve the Global Payments merger proposal, the Global Payments authorized share count proposal or the Global Payments declassification proposal or to ensure that any supplement or amendment to this joint proxy statement/prospectus is timely provided to holders of Global Payments common stock (the “Global Payments adjournment proposal”).

TSYS is holding a special meeting of holders of TSYS common stock (the “TSYS special meeting”) to obtain approval of the TSYS merger proposal. Holders of TSYS common stock will also be asked (1) to approve the proposal to adjourn the TSYS special meeting, if necessary or appropriate, to solicit additional proxies if there are not sufficient votes at the time of the TSYS special meeting to approve the TSYS merger

 

1


Table of Contents

proposal or to ensure that any supplement or amendment to this joint proxy statement/prospectus is timely provided to holders of TSYS common stock (the “TSYS adjournment proposal”), (2) to approve, on an advisory (non-binding) basis, the merger-related named executive officer compensation payments that will or may be paid by TSYS to its named executive officers in connection with the merger (the “TSYS compensation proposal”) and (3) to approve, on an advisory (non-binding) basis, an amendment to Global Payments’ articles of incorporation to declassify Global Payments’ board of directors and provide for the annual election of directors (the “TSYS declassification proposal”).

This document is also a prospectus that is being delivered to holders of TSYS common stock because, in connection with the merger, Global Payments is offering shares of Global Payments common stock to holders of TSYS common stock.

This joint proxy statement/prospectus contains important information about the merger and the other proposals being voted on at the Global Payments and TSYS special meetings. You should read it carefully and in its entirety. The enclosed materials allow you to have your shares of common stock voted by proxy without attending your meeting. Your vote is important and we encourage you to submit your proxy as soon as possible.

 

Q:

What will happen in the merger?

 

A:

In the merger, TSYS will merge with and into Global Payments. Each share of TSYS common stock issued and outstanding immediately prior to the effective time of the merger (the “effective time”) (other than certain shares held by Global Payments or TSYS) will be converted into the right to receive 0.8101 shares (the “exchange ratio” and such shares, the “merger consideration”) of Global Payments common stock. Upon completion of the merger, TSYS will no longer be a public company, and TSYS common stock will be delisted from the New York Stock Exchange (the “NYSE”), will be deregistered under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and will cease to be publicly traded. Holders of Global Payments common stock will continue to own their existing shares of Global Payments common stock. See the information provided in the section entitled “The Merger Agreement—Structure of the Merger” beginning on page [    ] and the merger agreement for more information about the merger.

 

Q:

When and where will each of the special meetings take place?

 

A:

The Global Payments special meeting will be held at [            ], on [                    ], 2019 at [            ] local time.

 

  The

TSYS special meeting will be held at [            ], on [            ], 2019 at [            ] local time.

Even if you plan to attend your respective company’s special meeting, Global Payments and TSYS recommend that you vote your shares in advance as described below so that your vote will be counted if you later decide not to or become unable to attend the applicable special meeting. Shares held in “street name” may be voted in person by you only if you obtain a signed legal proxy from your bank, broker or other nominee giving you the right to vote the shares.

 

Q:

What matters will be considered at each of the special meetings?

 

A:

At the Global Payments special meeting, holders of Global Payments common stock will be asked to consider and vote on the following proposals:

 

   

Global Payments Proposal 1: The Global Payments merger proposal. Approval of the merger agreement;

 

   

Global Payments Proposal 2: The Global Payments authorized share count proposal. Approval of the amendment to Global Payments’ articles of incorporation to increase the number of authorized shares of Global Payments common stock from two hundred million shares to four hundred million shares, effective only upon and immediately prior to the completion of the merger;

 

2


Table of Contents
   

Global Payments Proposal 3: The Global Payments declassification proposal. Approval of the amendment to Global Payments’ articles of incorporation to declassify the Global Payments board of directors and provide for annual elections of directors, effective only upon the completion of the merger; and

 

   

Global Payments Proposal 4: The Global Payments adjournment proposal. Approval of the adjournment of the Global Payments special meeting, if necessary or appropriate, to solicit additional proxies if there are not sufficient votes at the time of the Global Payments special meeting to approve the Global Payments merger proposal, the Global Payments authorized share count proposal or the Global Payments declassification proposal or to ensure that any supplement or amendment to this joint proxy statement/prospectus is timely provided to holders of Global Payments common stock.

At the TSYS special meeting, holders of TSYS common stock will be asked to consider and vote on the following proposals:

 

   

TSYS Proposal 1: The TSYS merger proposal. Approval of the merger agreement;

 

   

TSYS Proposal 2: The TSYS compensation proposal. Approval of, on an advisory (non-binding) basis, the merger-related named executive officer compensation payments that will or may be paid by TSYS to its named executive officers in connection with the merger;

 

   

TSYS Proposal 3: The TSYS declassification proposal. Approval of, on an advisory (non-binding) basis, an amendment to Global Payments’ articles of incorporation to declassify Global Payments’ board of directors and provide for the annual election of directors; and

 

   

TSYS Proposal 4: The TSYS adjournment proposal. Approval of the adjournment of the TSYS special meeting, if necessary or appropriate, to solicit additional proxies if there are not sufficient votes at the time of the TSYS special meeting to approve the TSYS merger proposal or to ensure that any supplement or amendment to this joint proxy statement/prospectus is timely provided to holders of TSYS common stock.

To complete the merger, among other things, holders of Global Payments common stock must approve the Global Payments merger proposal and the Global Payments authorized share count proposal and holders of TSYS common stock must approve the TSYS merger proposal. None of the approvals of the Global Payments declassification proposal, the Global Payments adjournment proposal, the TSYS compensation proposal, the TSYS declassification proposal or the TSYS adjournment proposal are conditions to the obligations of Global Payments or TSYS to complete the merger.

 

Q:

What will holders of TSYS common stock receive in the merger?

 

A:

In the merger, holders of TSYS common stock will receive 0.8101 shares of Global Payments common stock for each share of TSYS common stock held immediately prior to the completion of the merger. Global Payments will not issue any fractional shares of Global Payments common stock in the merger. Holders of TSYS common stock who would otherwise be entitled to a fractional share of Global Payments common stock in the merger will instead receive an amount in cash (rounded to the nearest cent) determined by multiplying the average closing-sale price per share of Global Payments common stock for the consecutive period of five (5) full trading days immediately preceding (but not including) the day on which the merger is completed (the “Global Payments closing share value”) by the fraction of a share (rounded to the nearest thousandth when expressed in decimal) of Global Payments common stock that such shareholder would otherwise be entitled to receive.

 

Q:

What will holders of Global Payments common stock receive in the merger?

 

A:

In the merger, holders of Global Payments common stock will not receive any consideration, and their shares of Global Payments common stock will remain outstanding and will constitute shares of the combined company. Following the merger, shares of Global Payments common stock will continue to be traded on the NYSE.

 

3


Table of Contents
Q:

Will the value of the merger consideration change between the date of this joint proxy statement/prospectus and the time the merger is completed?

 

A:

Yes. Although the number of shares of Global Payments common stock that holders of TSYS common stock will receive is fixed, the value of the merger consideration will fluctuate between the date of this joint proxy statement/prospectus and the completion of the merger based upon the market value for Global Payments common stock. Any fluctuation in the market price of Global Payments common stock after the date of this joint proxy statement/prospectus will change the value of the shares of Global Payments common stock that holders of TSYS common stock will receive.

 

Q:

How will the merger affect TSYS equity awards?

 

A:

At the effective time, each outstanding TSYS equity award granted under TSYS’ equity compensation plans (other than certain “single-trigger” awards described below) will be converted into a corresponding award with respect to Global Payments common stock, with the number of shares underlying such award (and, in the case of stock options, the applicable exercise price) adjusted based on the exchange ratio and rounded to the nearest whole share (in the case of stock options, rounded down to the nearest whole share). Each such converted TSYS equity award will continue to be subject to the same terms and conditions (including vesting and exercisability or payment terms) as applied to the corresponding TSYS equity award. In the case of TSYS performance share awards with a performance period that is incomplete or for which performance is not determinable as of the effective time, the number of shares underlying such awards will be the greater of the number of initial performance shares underlying such award and the number of shares that would have been earned based on actual performance as of the effective time, determined as set forth in the merger agreement, and such awards will cliff vest, subject to the holder’s continued service, on the last day of the originally scheduled performance period. In addition to the foregoing awards, certain TSYS equity awards held by employees who are not executive officers, pursuant to their terms, will vest automatically (i.e., “single-trigger”) at the effective time and be converted into the right to receive a number of shares of Global Payments common stock determined based on the exchange ratio in respect of each share of TSYS common stock subject thereto. The number of shares of TSYS common stock subject to performance-based single-trigger awards will be determined in a manner similar to the performance share awards described above.

 

Q:

How will the merger affect TSYS’ employee stock purchase plan?

 

A:

TSYS will take all necessary actions to (i) ensure that if the closing occurs prior to the end of the final offering period under the TSYS 2012 Employee Stock Purchase Plan (the “TSYS ESPP”), such final offering period will end on the closing date, and (ii) terminate the TSYS ESPP and distribute to the applicable participants any cash held on behalf of the participants in the TSYS ESPP no later than the effective time.

 

Q:

How does the Global Payments board of directors recommend that I vote at the Global Payments special meeting?

 

A:

The Global Payments board of directors unanimously recommends that you vote “FOR” the Global Payments merger proposal, “FOR” the Global Payments authorized share count proposal, “FOR” the Global Payments declassification proposal and “FOR” the Global Payments adjournment proposal.

In considering the recommendations of the Global Payments board of directors, holders of Global Payments common stock should be aware that Global Payments’ directors and executive officers may have interests in the merger that are different from, or in addition to, the interests of holders of Global Payments common stock generally. For a more complete description of these interests, see the information provided in the section entitled “The Merger—Interests of Global Payments’ Directors and Executive Officers in the Merger” beginning on page [    ].

 

4


Table of Contents
Q:

How does the TSYS board of directors recommend that I vote at the TSYS special meeting?

 

A:

The TSYS board of directors unanimously recommends that you vote “FOR” the TSYS merger proposal, “FOR” the TSYS compensation proposal, “FOR” the TSYS declassification proposal and “FOR” the TSYS adjournment proposal.

In considering the recommendations of the TSYS board of directors, holders of TSYS common stock should be aware that TSYS’ directors and executive officers may have interests in the merger that are different from, or in addition to, the interests of holders of TSYS common stock generally. For a more complete description of these interests, see the information provided in the section entitled “The Merger—Interests of TSYS’ Directors and Executive Officers in the Merger” beginning on page [    ].

 

Q:

Who is entitled to vote at the Global Payments special meeting?

 

A:

The record date for the Global Payments special meeting is [                    ], 2019. All holders of Global Payments common stock who held shares at the close of business on the record date for the Global Payments special meeting are entitled to receive notice of, and to vote at, the Global Payments special meeting.

Each holder of Global Payments common stock is entitled to cast one (1) vote on each matter properly brought before the Global Payments special meeting for each share of Global Payments common stock that such holder owned of record as of the record date. As of the close of business on the record date for the Global Payments special meeting, there were [            ] outstanding shares of Global Payments common stock. Physical attendance at the special meeting is not required to vote. See below and the section entitled “The Global Payments Special Meeting—Proxies” beginning on page [    ] for instructions on how to vote your shares without attending the Global Payments special meeting.

 

Q:

Who is entitled to vote at the TSYS special meeting?

 

A:

The record date for the TSYS special meeting is [                    ], 2019. All holders of TSYS common stock who held shares at the close of business on the record date for the TSYS special meeting are entitled to receive notice of, and to vote at, the TSYS special meeting.

Each holder of TSYS common stock is entitled to cast one (1) vote on each matter properly brought before the TSYS special meeting for each share of TSYS common stock that such holder owned of record as of the record date. As of the close of business on the record date for the TSYS special meeting, there were [            ] outstanding shares of TSYS common stock. Physical attendance at the special meeting is not required to vote. See below and the section entitled “The TSYS Special Meeting—Proxies” beginning on page [            ] for instructions on how to vote your shares without attending the TSYS special meeting.

 

Q:

What constitutes a quorum for the Global Payments special meeting?

 

A:

Holders of a majority of the shares of Global Payments common stock entitled to vote at the special meeting, present in person or represented by proxy, will be necessary to constitute a quorum for the transaction of business at the Global Payments special meeting. If you fail to submit a proxy or to vote in person at the Global Payments special meeting, your shares of Global Payments common stock will not be counted towards a quorum. Abstentions are considered present for purposes of establishing a quorum.

 

Q:

What constitutes a quorum for the TSYS special meeting?

 

A:

Holders of a majority of the issued and outstanding shares of TSYS common stock, present in person or represented by proxy, will be necessary to constitute a quorum for the transaction of business at the TSYS special meeting. If you fail to submit a proxy or to vote in person at the TSYS special meeting, your shares of TSYS common stock will not be counted towards a quorum. Abstentions are considered present for purposes of establishing a quorum.

 

5


Table of Contents
Q:

If my shares of common stock are held in “street name” by my broker, will my broker vote my shares for me?

 

A:

If you hold your shares in a stock brokerage account or if your shares are held by a bank or nominee (that is, in “street name”), please follow the voting instructions provided by your broker, bank or nominee. Please note that you may not vote shares held in street name by returning a proxy card directly to Global Payments or TSYS or by voting in person at either special meeting unless you provide a “legal proxy,” which you must obtain from your broker, bank or nominee. Further, brokers who hold shares of Global Payments or TSYS common stock may not give a proxy to Global Payments or TSYS to vote those shares on any of the Global Payments proposals or any of the TSYS proposals without specific instructions from their customers.

 

Q:

What vote is required for the approval of each proposal at the Global Payments special meeting?

 

A:

Global Payments Proposal 1: Global Payments merger proposal. Approval of the Global Payments merger proposal requires the affirmative vote of a majority of all the votes entitled to be cast on the merger agreement by the holders of Global Payments common stock. Shares of Global Payments common stock not present, and shares present and not voted, whether by broker non-vote, abstention or otherwise, will have the same effect as votes cast “AGAINST” the proposal to approve the merger agreement.

Global Payments Proposal 2: Global Payments authorized share count proposal. Approval of the amendment to Global Payments’ articles of incorporation to increase the number of authorized shares of Global Payments common stock, effective immediately prior to and only upon the completion of the merger, requires the affirmative vote of a majority of all the votes entitled to be cast on such matter by the holders of Global Payments common stock. Shares of Global Payments common stock not present, and shares present and not voted, whether by broker non-vote, abstention or otherwise, will have the same effect as votes cast “AGAINST” the Global Payments authorized share count proposal.

Global Payments Proposal 3: Global Payments declassification proposal. Approval of the amendment to Global Payments’ articles of incorporation to declassify the Global Payments board of directors and provide for annual elections of directors, effective only upon the completion of the merger, requires the affirmative vote of two-thirds (2/3) of the outstanding shares of Global Payments common stock entitled to vote on such matter by the holders of Global Payments common stock. Shares of Global Payments common stock not present, and shares present and not voted, whether by broker non-vote, abstention or otherwise, will have the same effect as votes cast “AGAINST” the Global Payments declassification proposal.

Global Payments Proposal 4: The Global Payments adjournment proposal. Approval of the Global Payments adjournment proposal requires the affirmative vote of a majority of the shares of Global Payments common stock represented at the Global Payments special meeting, whether or not a quorum is present. Accordingly, an abstention will have the same effect as a vote “AGAINST” the Global Payments adjournment proposal, while a broker non-vote or other failure to vote will have no effect on the outcome of the Global Payments adjournment proposal.

 

Q:

What vote is required for the approval of each proposal at the TSYS special meeting?

 

A:

TSYS Proposal 1: TSYS merger proposal. Approval of the TSYS merger proposal requires the affirmative vote of a majority of all the votes entitled to be cast on the merger agreement by the holders of TSYS common stock. Shares of TSYS common stock not present, and shares present and not voted, whether by broker non-vote, abstention or otherwise, will have the same effect as votes cast “AGAINST” the proposal to approve the merger agreement.

TSYS Proposal 2: TSYS compensation proposal. Approval of the TSYS compensation proposal requires the affirmative vote of a majority of the votes cast by the holders of TSYS common stock. Shares of TSYS common stock not present, and shares present and not voted, whether by broker non-vote, abstention or otherwise, will have no effect on the outcome of the TSYS compensation proposal.

 

6


Table of Contents

TSYS Proposal 3: TSYS declassification proposal. Approval of the TSYS declassification proposal requires the affirmative vote of a majority of the votes cast by the holders of TSYS common stock. Shares of TSYS common stock not present, and shares present and not voted, whether by broker non-vote, abstention or otherwise, will have no effect on the outcome of the TSYS declassification proposal.

TSYS Proposal 4: TSYS adjournment proposal. Approval of the TSYS adjournment proposal requires the affirmative vote of a majority of the shares of TSYS common stock represented at the TSYS special meeting, whether or not a quorum is present. Accordingly, an abstention will have the same effect as a vote “AGAINST” the TSYS adjournment proposal, while a broker non-vote or other failure to vote will have no effect on the outcome of the TSYS adjournment proposal.

 

Q:

Why am I being asked to consider and vote on a proposal to approve, by non-binding, advisory vote, merger-related compensation arrangements for TSYS’ named executive officers (i.e., the TSYS compensation proposal)?

 

A:

Under SEC rules, TSYS is required to seek a non-binding, advisory vote with respect to the compensation that may be paid or become payable to TSYS’ named executive officers that is based on or otherwise relates to the merger.

 

Q:

What happens if holders of TSYS common stock do not approve, by non-binding, advisory vote, the TSYS compensation proposal?

 

A:

The vote on the proposal to approve the merger-related compensation arrangements for each of TSYS’ named executive officers is separate and apart from the votes to approve the other proposals being presented at the TSYS special meeting. Because the vote on the proposal to approve the merger-related executive compensation is advisory in nature only, it will not be binding upon Global Payments, TSYS, or the combined company in the merger. Accordingly, the merger-related compensation will be paid to TSYS’ named executive officers to the extent payable in accordance with the terms of their compensation agreements and arrangements even if the holders of TSYS common stock do not approve the proposal to approve the merger-related executive compensation.

 

Q:

Why am I being asked to consider and vote on a proposal to approve, by non-binding, advisory vote, an amendment to Global Payments’ articles of incorporation to declassify Global Payments’ board of directors and provide for the annual election of directors (i.e., the TSYS declassification proposal)?

 

A:

Even though TSYS does not have a classified board (i.e., its directors are elected annually) and the Global Payments declassification proposal is not a condition to the closing of the merger, the SEC has issued interpretive guidance with respect to the “unbundling” of proposals under the Exchange Act that requires TSYS shareholders (in their capacity as shareholders of TSYS) to also separately vote on the amendment to Global Payments’ articles of incorporation to declassify Global Payments’ board of directors and provide for the annual election of directors. As further described below, this vote by TSYS shareholders is advisory (non-binding) and will have no impact on whether the Global Payments declassification is approved by Global Payments shareholders under applicable law.

 

Q:

What happens if holders of TSYS common stock do not approve, by non-binding, advisory vote, the TSYS declassification proposal?

 

A:

The vote on the TSYS declassification proposal is separate and apart from the votes to approve the other proposals being presented at the TSYS special meeting. Approval by TSYS’ shareholders of the TSYS declassification proposal is not a condition to completion of the merger. The votes received by TSYS’ shareholders with respect to the TSYS declassification proposal are advisory and will not be binding on TSYS or Global Payments (or the combined company that results from the merger) regardless of whether

 

7


Table of Contents
  the TSYS merger proposal is approved. If Global Payments’ shareholders as of the Global Payments record date approve the Global Payments declassification articles amendment, such amendment will be effective only upon completion of the merger and effective as of the effective time.

 

Q:

What if I hold shares in both Global Payments and TSYS?

 

A:

If you hold shares of both Global Payments common stock and TSYS common stock, you will receive two (2) separate packages of proxy materials. A vote cast as a holder of Global Payments common stock will not count as a vote cast as a holder of TSYS common stock, and a vote cast as a holder of TSYS common stock will not count as a vote cast as a holder of Global Payments common stock. Therefore, please submit separate proxies for your shares of Global Payments common stock and your shares of TSYS common stock.

 

Q:

How can I vote my shares in person at my respective special meeting?

 

A:

Record Holders. Shares held directly in your name as the holder of record of Global Payments common stock or TSYS common stock may be voted in person at the Global Payments special meeting or the TSYS special meeting, as applicable. If you choose to vote your shares in person at the respective special meeting, please bring your enclosed proxy card and proof of identification.

Shares in “street name”. Shares held in “street name” may be voted in person by you only if you obtain a signed legal proxy from your bank, broker or other nominee giving you the right to vote the shares. If you choose to vote your shares in person at the Global Payments special meeting or the TSYS special meeting, as applicable, please bring proof of identification.

Even if you plan to attend the Global Payments special meeting or the TSYS special meeting, as applicable, Global Payments and TSYS recommend that you vote your shares in advance as described below so that your vote will be counted if you later decide not to or become unable to attend the respective special meeting.

Additional information on attending the special meetings can be found under the section entitled “The Global Payments Special Meeting” on page [    ] and under the section entitled “The TSYS Special Meeting” on page [    ].

 

Q:

How can I vote my shares without attending my respective special meeting?

 

A:

Whether you hold your shares directly as the holder of record of Global Payments common stock or TSYS common stock or beneficially in “street name”, you may direct your vote by proxy without attending the Global Payments special meeting or the TSYS special meeting, as applicable. You can vote by proxy over the Internet, by telephone or by mail by following the instructions provided in the enclosed proxy card. Please note that if you hold shares beneficially in “street name”, you should follow the voting instructions provided by your bank, broker or other nominee.

Additional information on voting procedures can be found under the section entitled “The Global Payments Special Meeting” on page [    ] and under the section entitled “The TSYS Special Meeting” on page [    ].

 

Q:

What do I need to do now?

 

A:

After carefully reading and considering the information contained in this joint proxy statement/prospectus, please respond by completing, signing and dating the accompanying proxy card and returning it in the enclosed postage-paid envelope, or by submitting your proxy by telephone or through the Internet, as soon as possible so that your shares may be represented at your meeting. Please note that if you hold shares beneficially in “street name”, you should follow the voting instructions provided by your bank, broker or other nominee.

 

8


Table of Contents
Q:

If my shares are held in “street name” by a broker, bank or other nominee, will my broker, bank or other nominee vote my shares for me?

 

A:

No. Your bank, broker or other nominee cannot vote your shares on non-routine matters without instructions from you, including each company’s respective merger proposals. You should instruct your bank, broker or other nominee how to vote your shares in accordance with the instructions provided to you. Please check the voting form used by your bank, broker or other nominee.

 

Q:

Why is my vote important?

 

A:

If you do not vote, it will be more difficult for Global Payments or TSYS to obtain the necessary quorum to hold its special meeting. In addition, your failure to submit a proxy or vote in person, or failure to instruct your bank or broker how to vote, or abstention will have the same effect as a vote “AGAINST” approval of the merger agreement, the Global Payments authorized share count proposal and the Global Payments declassification proposal. The merger agreement must be approved by the affirmative vote of a majority of all the votes entitled to be cast on the merger agreement by the holders of Global Payments common stock and by the affirmative vote of a majority of all the votes entitled to be cast on the merger agreement by the holders of TSYS common stock. The Global Payments authorized share count proposal must be approved by a majority of all the votes entitled to be cast on such matter by the holders of Global Payments common stock, and the Global Payments declassification proposal must be approved by two-thirds (2/3) of the outstanding shares of Global Payments common stock entitled to vote on such matter by the holders of Global Payments common stock. The Global Payments board of directors and the TSYS board of directors unanimously recommend that you vote “FOR” the Global Payments merger proposal and the TSYS merger proposal, respectively, and “FOR” the other proposals to be considered at the Global Payments special meeting and the TSYS special meeting, respectively, including the Global Payments authorized share count proposal and the Global Payments declassification proposal.

 

Q:

Can I change my vote after I have delivered my proxy or voting instruction card?

 

A:

Yes. You can change your vote at any time before your proxy is voted at your meeting. You can do this by:

 

   

submitting a written statement that you would like to revoke your proxy to the corporate secretary of Global Payments or TSYS, as applicable;

 

   

signing and returning a proxy card with a later date;

 

   

attending the special meeting in person, notifying the corporate secretary and voting by ballot at the special meeting; or

 

   

voting by telephone or the Internet at a later time.

If your shares are held by a broker, bank or other nominee, you should contact your broker, bank or other nominee to change your vote.

 

Q:

Are holders of Global Payments common stock entitled to appraisal rights?

 

A:

No. Holders of Global Payments common stock are not entitled to appraisal or dissenters’ rights under the Georgia Business Corporation Code (the “GBCC”). For more information, see the section entitled “The Merger—Appraisal or Dissenters’ Rights in the Merger” beginning on page [    ].

 

Q:

Are holders of TSYS common stock entitled to appraisal rights?

 

A:

No. Holders of TSYS common stock are not entitled to appraisal or dissenters’ rights under the GBCC. For more information, see the section entitled “The Merger—Appraisal or Dissenters’ Rights in the Merger” beginning on page [    ].

 

9


Table of Contents
Q:

Are there any risks that I should consider in deciding whether to vote for the approval of the Global Payments merger proposal, the approval of the Global Payments authorized share count proposal, the Global Payments declassification proposal or the approval of the TSYS merger proposal, or the other proposals to be considered at the Global Payments special meeting and the TSYS special meeting, respectively?

 

A:

Yes. You should read and carefully consider the risk factors set forth in the section entitled “Risk Factors” beginning on page [    ]. You also should read and carefully consider the risk factors of Global Payments and TSYS contained in the documents that are incorporated by reference into this joint proxy statement/prospectus.

 

Q:

What are the material U.S. federal income tax consequences of the merger to holders of TSYS common stock?

 

A:

The merger is intended to qualify as a “reorganization” within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended (the “Code”), and it is a condition to the respective obligations of Global Payments and TSYS to complete the merger that each of Global Payments and TSYS receive a legal opinion to that effect. Accordingly, holders of TSYS common stock are not expected to recognize any gain or loss for U.S. federal income tax purposes on the exchange of their TSYS common stock for Global Payments common stock in the merger, except with respect to any cash received instead of a fractional share of Global Payments common stock. You should be aware that the tax consequences to you of the merger may depend upon your own situation. In addition, you may be subject to state, local or foreign tax laws that are not discussed in this joint proxy statement/prospectus. You should therefore consult with your own tax advisor for a full understanding of the tax consequences to you of the merger. For a more complete discussion of the material U.S. federal income tax consequences of the merger, see the section entitled “Material U.S. Federal Income Tax Consequences of the Merger” beginning on page [    ].

 

Q:

When is the merger expected to be completed?

 

A:

Global Payments and TSYS currently expect the merger to close in the fourth quarter of 2019. However, neither Global Payments nor TSYS can predict the actual date on which the merger will be completed, or if the merger will be completed at all, because completion is subject to conditions and factors outside the control of both companies. Global Payments and TSYS must first obtain the approval of holders of Global Payments common stock and holders of TSYS common stock for the merger, as well as obtain necessary regulatory approvals and satisfy certain other closing conditions.

 

Q:

What happens if the merger is not completed?

 

A:

If the merger agreement is not completed, holders of TSYS common stock will not receive any consideration for their shares of TSYS common stock in connection with the merger. Instead, TSYS will remain an independent public company and TSYS common stock will continue to be listed and traded on the NYSE, and Global Payments will not complete the issuance of shares of Global Payments common stock pursuant to the merger agreement. In addition, if the merger agreement is terminated in certain circumstances, a termination fee of $860 million may be payable by either Global Payments or TSYS to the other party, as applicable. See the section entitled “The Merger Agreement—Termination Fee” beginning on page [    ] for a more detailed discussion of the circumstances under which a termination fee will be required to be paid.

 

Q:

Should I send in my stock certificates now?

 

A:

No. Please do not send in your stock certificates with your proxy. After the merger is completed, an exchange agent mutually agreed upon by Global Payments and TSYS (the “exchange agent”) will send you

 

10


Table of Contents
  instructions for exchanging TSYS stock certificates for the consideration to be received in the merger. See the section entitled “The Merger Agreement—Exchange of Shares; Exchange of TSYS Stock Certificates” beginning on page [    ].

 

Q:

What should I do if I receive more than one set of voting materials for the same special meeting?

 

A:

If you hold shares of Global Payments common stock or TSYS common stock in “street name” and also directly in your name as a holder of record or otherwise or if you hold shares of Global Payments common stock or TSYS common stock in more than one (1) brokerage account, you may receive more than one (1) set of voting materials relating to the same special meeting.

Record Holders. For shares held directly, please complete, sign, date and return each proxy card (or cast your vote by telephone or Internet as provided on each proxy card) or otherwise follow the voting instructions provided in this joint proxy statement/prospectus to ensure that all of your shares of Global Payments common stock or TSYS common stock are voted.

Shares in “street name”. For shares held in “street name” through a bank, broker or other nominee, you should follow the procedures provided by your bank, broker or other nominee to vote your shares.

 

Q:

Who can help answer my questions?

 

A:

Global Payments shareholders: If you have any questions about the merger or how to submit your proxy or voting instruction card, or if you need additional copies of this joint proxy statement/prospectus or the enclosed proxy card or voting instruction card, you should contact Investor Relations at (770) 829-8478 or Global Payments’ proxy solicitor, Innisfree M&A Incorporated, at the following address or phone number: [    ].

TSYS shareholders: If you have any questions about the merger or how to submit your proxy or voting instruction card, or if you need additional copies of this joint proxy statement/prospectus or the enclosed proxy card or voting instruction card, you should contact Investor Relations at (706) 644-6081 or TSYS’ proxy solicitor, D.F. King & Co., Inc., at the following address or phone number: [    ].

 

11


Table of Contents

SUMMARY

This summary highlights selected information in this joint proxy statement/prospectus and may not contain all of the information that is important to you. You should carefully read this entire joint proxy statement/prospectus and the other documents we refer you to for a more complete understanding of the matters being considered at the special meetings. In addition, we incorporate by reference important business and financial information about Global Payments and TSYS into this joint proxy statement/prospectus. You may obtain the information incorporated by reference into this joint proxy statement/prospectus without charge by following the instructions in the section entitled “Where You Can Find More Information” beginning on page [    ] of this joint proxy statement/prospectus.

The Parties to the Merger (pages [    ] and [    ])

Global Payments Inc.

3550 Lenox Road

Atlanta, Georgia 30326

(770) 829-8000

Global Payments is a leading worldwide provider of payment technology and software solutions delivering innovative services to its customers globally. Its technologies, services and employee expertise enable it to provide a broad range of solutions that allow its customers to accept various payment types and operate their businesses more efficiently. Global Payments distributes its services across a variety of channels in 32 countries throughout North America, Europe, the Asia-Pacific region and Brazil and operates in three reportable segments: North America, Europe and Asia-Pacific.

Global Payments was incorporated in 2000 and spun-off from its former parent company in 2001. Including its time as part of its former parent company, Global Payments has been in the payment technology services business since 1967. Since its spin-off, Global Payments has expanded in existing markets and into new markets internationally by pursuing further acquisitions and joint ventures. In 2016, Global Payments merged with Heartland Payment Systems, Inc. (“Heartland”), which significantly expanded its small and medium-sized enterprise distribution, customer base and vertical reach in the United States.

Global Payments is organized under the laws of the state of Georgia. The address and telephone number of its executive offices are 3550 Lenox Road, Atlanta, Georgia 30326, and (770) 829-8000.

Global Payments common stock is traded on the NYSE under the symbol “GPN”.

Total System Services, Inc.

One TSYS Way

Columbus, Georgia 31901

(706) 644-6081

Total System Services, Inc. is a global payment solutions provider headquartered in Columbus, Georgia. TSYS provides payment processing services, merchant services and related payment services to financial and nonfinancial institutions. In addition, TSYS provides general purpose reloadable prepaid debit and payroll cards, demand deposit accounts and other financial service solutions to the underbanked and other consumers and businesses. TSYS’ services are provided through three operating segments: Issuer Solutions, Merchant Solutions and Consumer Solutions. Through the Issuer Solutions segment, TSYS processes information through its cardholder systems to financial and nonfinancial institutions throughout the United States and internationally.



 

12


Table of Contents

The Merchant Solutions segment provides merchant services to merchant acquirers and merchants primarily in the United States. The Consumer Solutions segment provides financial service solutions to consumers and businesses in the United States. TSYS was incorporated in 1982 and spun-off from its former parent company in 2007.

TSYS common stock is traded on the NYSE under the symbol “TSS”.

TSYS’ principal office is located at One TSYS Way, Columbus, Georgia 31901, and its telephone number at that location is (706) 644-6081.

The Merger and the Merger Agreement (pages [    ] and [    ])

The terms and conditions of the merger are contained in the merger agreement, a copy of which is attached as Annex A to this joint proxy statement/prospectus. You are encouraged to read the merger agreement carefully and in its entirety, as it is the primary legal document that governs the merger.

Subject to the terms and conditions of the merger agreement, at the completion of the merger, TSYS will merge with and into Global Payments, with Global Payments as the surviving corporation. Upon completion of the merger, TSYS common stock will be delisted from the NYSE and deregistered under the Exchange Act and will cease to be publicly traded.

Exchange Ratio (page [    ])

In the merger, holders of TSYS common stock will receive 0.8101 shares of Global Payments common stock for each share of TSYS common stock they hold immediately prior to the effective time. Global Payments will not issue any fractional shares of Global Payments common stock in the merger. Holders of TSYS common stock who would otherwise be entitled to a fraction of a share of Global Payments common stock in the merger will instead receive, for the fraction of a share, an amount in cash (rounded to the nearest cent) based on the Global Payments closing share value.

Global Payments common stock is listed on the NYSE under the symbol “GPN”, and TSYS common stock is listed on the NYSE under the symbol “TSS”. The following table shows the closing sale prices of Global Payments common stock and TSYS common stock as reported on the NYSE on May 23, 2019, the last full trading day before the publication of news reports relating to a potential transaction between Global Payments and TSYS, May 24, 2019, the last trading day before the public announcement of the merger, and on [    ], 2019, the last practicable trading day before the date of this joint proxy statement/prospectus. This table also shows the implied value of the merger consideration to be issued in exchange for each share of TSYS common stock, which was calculated by multiplying the closing price of Global Payments common stock on those dates by the exchange ratio of 0.8101.

 

     Global Payments
Common
Stock
     TSYS
Common
Stock
     Implied Value
of One Share
of TSYS
Common
Stock
 

May 23, 2019

   $ 147.96      $ 99.62      $ 119.86  

May 24, 2019

   $ 153.44      $ 113.45      $ 124.30  

[            ]

   $ [            ]      $ [            ]      $ [            ]  

For more information on the exchange ratio, see the section entitled “The Merger—Terms of the Merger” beginning on page [    ] and “The Merger Agreement—Merger Consideration” beginning on page [    ].



 

13


Table of Contents

Treatment of TSYS Equity Awards (page [    ])

At the effective time, each outstanding TSYS equity award granted under TSYS’ equity compensation plans (other than certain “single-trigger” awards described below) will be converted into a corresponding award with respect to Global Payments common stock, with the number of shares underlying such award (and, in the case of stock options, the applicable exercise price) adjusted based on the exchange ratio and rounded to the nearest whole share (in the case of stock options, rounded down to the nearest whole share). Each such converted TSYS equity award will continue to be subject to the same terms and conditions (including vesting and exercisability or payment terms) as applied to the corresponding TSYS equity award. In the case of TSYS performance share awards with a performance period that is incomplete or for which performance is not determinable as of the effective time, the number of shares underlying such awards will be the greater of the number of initial performance shares underlying such award and the number of shares that would have been earned based on actual performance as of the effective time, determined as set forth in the merger agreement, and such awards will cliff vest, subject to the holder’s continued service, on the last day of the originally scheduled performance period. In addition to the foregoing awards, certain TSYS equity awards held by employees who are not executive officers, pursuant to their terms, will vest automatically (i.e., “single-trigger”) at the effective time and be converted into the right to receive a number of shares of Global Payments common stock determined based on the exchange ratio in respect of each share of TSYS common stock subject thereto. The number of shares of TSYS common stock subject to performance-based single-trigger awards will be determined in a manner similar to the performance share awards described above.

Treatment of TSYS ESPP (page [    ])

TSYS will take all necessary actions to (i) ensure that if the closing occurs prior to the end of the final offering period under the TSYS ESPP, such final offering period will end on the closing date, and (ii) terminate the TSYS ESPP and distribute to the applicable participants any cash held on behalf of the participants in the TSYS ESPP no later than the effective time.

Material U.S. Federal Income Tax Consequences (page [    ])

The merger is intended to qualify as a “reorganization” within the meaning of Section 368(a) of the Code, and it is a condition to the respective obligations of Global Payments and TSYS to complete the merger that each of Global Payments and TSYS receive a legal opinion to that effect. Accordingly, holders of TSYS common stock are not expected to recognize any gain or loss for U.S. federal income tax purposes on the exchange of their TSYS common stock for Global Payments common stock in the merger, except with respect to any cash received instead of a fractional share of Global Payments common stock.

You should be aware that the tax consequences to you of the merger may depend upon your own situation. In addition, you may be subject to state, local or foreign tax laws that are not discussed in this joint proxy statement/prospectus. You should therefore consult with your own tax advisor for a full understanding of the tax consequences to you of the merger.

Global Payments’ Reasons for the Merger; Recommendation of Global Payments’ Board of Directors (page [    ])

The Global Payments board of directors has determined that the merger, the merger agreement and the transactions contemplated by the merger agreement are advisable and in the best interests of Global Payments and its shareholders and has unanimously adopted and approved the merger agreement, the merger and the other transactions contemplated by the merger agreement. The Global Payments board of directors unanimously recommends that holders of Global Payments common stock vote “FOR” the approval of the merger agreement



 

14


Table of Contents

and “FOR” the other proposals presented at the Global Payments special meeting. For a more detailed discussion of the Global Payments board of directors’ recommendation, see the section entitled “The Merger—Global Payments’ Reasons for the Merger; Recommendation of Global Payments’ Board of Directors” beginning on page [    ].

TSYS’ Reasons for the Merger; Recommendation of TSYS’ Board of Directors (page [    ])

The TSYS board of directors has determined that the merger, the merger agreement and the transactions contemplated by the merger agreement are advisable and in the best interests of TSYS and its shareholders and has unanimously adopted and approved the merger agreement, the merger and the other transactions contemplated by the merger agreement. The TSYS board of directors unanimously recommends that holders of TSYS common stock vote “FOR” the approval of the merger agreement and “FOR” the other proposals presented at the TSYS special meeting. For a more detailed discussion of the TSYS board of directors’ recommendation, see the section entitled “The Merger—TSYS’ Reasons for the Merger; Recommendation of TSYS’ Board of Directors” beginning on page [    ].

Opinions of Global Payments’ Financial Advisors (page [    ])

Global Payments engaged BofA Securities, Inc. (“BofA Merrill Lynch”) and J.P. Morgan Securities LLC (“J.P. Morgan”) as financial advisors in connection with TSYS’ consideration of the proposed merger.

Opinion of BofA Merrill Lynch

In connection with the merger, BofA Merrill Lynch, Global Payments’ financial advisor, delivered to the Global Payments board of directors a written opinion, dated as of May 27, 2019, as to the fairness, from a financial point of view and as of the date of the opinion, to Global Payments of the exchange ratio provided for in the merger. The full text of the written opinion, dated as of May 27, 2019, of BofA Merrill Lynch, which describes, among other things, the assumptions made, procedures followed, factors considered and limitations on the review undertaken, is attached as Annex B to this joint proxy statement/prospectus and is incorporated by reference herein in its entirety. BofA Merrill Lynch provided its opinion to the Global Payments board of directors (in its capacity as such) for the benefit and use of the Global Payments board of directors in connection with and for purposes of its evaluation of the exchange ratio from a financial point of view. BofA Merrill Lynch’s opinion does not address any other aspect of the merger and no opinion or view was expressed as to the relative merits of the merger in comparison to other strategies or transactions that might be available to Global Payments or in which Global Payments might engage or as to the underlying business decision of Global Payments to proceed with or effect the merger. BofA Merrill Lynch’s opinion does not constitute a recommendation to any shareholder as to how to vote or act in connection with the proposed merger or any other matter.

Opinion of J.P. Morgan

At the meeting of the Global Payments board of directors on May 27, 2019, J.P. Morgan rendered its oral opinion to the Global Payments board of directors, confirmed by delivery of a written opinion dated May 27, 2019, that, as of such date and based upon and subject to the factors and assumptions set forth in its opinion, the exchange ratio was fair, from a financial point of view, to Global Payments. The full text of the written opinion of J.P. Morgan dated May 27, 2019, which sets forth the assumptions made, matters considered, and limits on the review undertaken, is attached as Annex C to this joint proxy statement/prospectus and is incorporated herein by reference in its entirety. J.P. Morgan’s written opinion was addressed to the Global Payments board of directors (in its capacity as such) in connection with and for the purposes of its evaluation of the merger, was directed only to the exchange ratio and did not address any other aspect of the merger. J.P. Morgan expressed no opinion as to the fairness of the exchange ratio to the holders of any class of securities,



 

15


Table of Contents

creditors or other constituencies of Global Payments or as to the underlying decision by Global Payments to engage in the proposed merger. The issuance of J.P. Morgan’s opinion was approved by a fairness committee of J.P. Morgan. The opinion does not constitute a recommendation to any shareholder of Global Payments as to how such shareholder should vote with respect to the merger or any other matter.

Opinions of TSYS’ Financial Advisors (page [    ])

TSYS engaged Goldman Sachs & Co. LLC (“Goldman Sachs”) and Greenhill & Co., LLC (“Greenhill”) as financial advisors in connection with TSYS’ consideration of the proposed merger.

Opinion of Greenhill

At the May 27, 2019 meeting of the TSYS board of directors held to evaluate the merger, Greenhill rendered an oral opinion, confirmed by delivery of a written opinion dated as of May 27, 2019, to the effect that, as of such date and subject to and based on the various assumptions made, procedures followed, matters considered and qualifications and limitations of the review set forth therein, the exchange ratio pursuant to the merger agreement was fair, from a financial point of view, to the holders of TSYS common stock.

The full text of the written opinion of Greenhill, dated May 27, 2019, which sets forth the assumptions made, procedures followed, matters considered and qualifications and limitations of the review undertaken in connection with the opinion, is attached as Annex D and is incorporated herein by reference. The summary of the Greenhill opinion provided in this joint proxy statement/prospectus is qualified in its entirety by reference to the full text of the opinion. We encourage you to read Greenhill’s opinion, and the section “The Merger—Opinions of TSYS’ Financial Advisors—Opinion of Greenhill” carefully and in their entirety. Greenhill provided advisory services and its opinion for the information and assistance of the TSYS board of directors in connection with its consideration of the merger. Greenhill’s opinion is not a recommendation as to how any holder of shares of TSYS common stock should vote with respect to matters related to the merger, or any other matter.

For more information, see the section entitled “The Merger—Opinions of TSYS’ Financial Advisors—Opinion of Greenhill” on page [    ] and Annex D of this joint proxy statement/prospectus.

Opinion of Goldman Sachs

At a meeting of the TSYS board of directors, Goldman Sachs rendered to the TSYS board of directors its oral opinion, subsequently confirmed by delivery of a written opinion, dated May 27, 2019, to the effect that, as of the date of Goldman Sachs’ written opinion and based upon and subject to the factors and assumptions set forth in Goldman Sachs’ written opinion, the exchange ratio pursuant to the merger agreement was fair from a financial point of view to the holders (other than Global Payments and its affiliates) of shares of TSYS common stock.

The full text of the written opinion of Goldman Sachs, dated May 27, 2019, which sets forth the assumptions made, procedures followed, matters considered, qualifications and limitations on the review undertaken in connection with the opinion, is attached to this joint proxy statement/prospectus as Annex E. The summary of Goldman Sachs’ opinion contained in this joint proxy statement/prospectus is qualified in its entirety by reference to the full text of Goldman Sachs’ written opinion. Goldman Sachs’ advisory services and opinion were provided for the information and assistance of the TSYS board of directors in connection with its consideration of the merger and the opinion does not constitute a recommendation as to how any TSYS shareholder should vote with respect to the merger or any other matter. For more information, see the section entitled “The Merger—Opinions of TSYS’ Financial Advisors—Opinion of Goldman Sachs” on page [    ] and Annex E of this joint proxy statement/prospectus.



 

16


Table of Contents

Appraisal or Dissenters’ Rights in the Merger (page [    ])

Holders of Global Payments common stock and TSYS common stock are not entitled to appraisal or dissenters’ rights under the GBCC. For more information, see the section entitled “The Merger—Appraisal or Dissenters’ Rights in the Merger” beginning on page [    ].

Interests of Global Payments’ Directors and Executive Officers in the Merger (page [    ])

In considering the Global Payments board of directors’ recommendation to vote for the Global Payments merger proposal, holders of Global Payments common stock should be aware that Global Payments’ directors and executive officers may have interests in the merger that are different from, or in addition to, those of holders of Global Payments common stock generally. These interests include, following closing of the merger, that certain of Global Payments’ directors and executive officers will continue to serve as directors or executive officers, as applicable, of the combined company. The Global Payments board of directors was aware of and considered these respective interests when deciding to adopt and approve the merger agreement. For more information, see the section entitled “The Merger—Interests of Global Payments’ Directors and Executive Officers in the Merger” beginning on page [    ].

Interests of TSYS’ Directors and Executive Officers in the Merger (page [    ])

In considering the recommendation of TSYS’ board of directors to vote for the TSYS merger proposal, TSYS shareholders should be aware that the directors and executive officers of TSYS may have interests in the merger that are different from, or in addition to, the interests of TSYS shareholders generally and that may create potential conflicts of interest. These interests include, among others, severance benefits under existing agreements, rights to continuing indemnification and directors’ and officers’ liability insurance, accelerated vesting of certain equity awards, expected service as a member of the Global Payments board and the right of the TSYS CEO to be the chairman of the Global Payments board upon the effective time of the merger. The TSYS board of directors was aware of these interests and considered them, among other matters, in evaluating and negotiating the merger agreement and approving the merger agreement, and in recommending to TSYS shareholders that they vote for the TSYS merger proposal. For more information, see the sections entitled “The Merger—Interests of TSYS’ Directors and Executive Officers in the Merger” beginning on page [     ].

Governance of the Combined Company After the Merger (page [    ])

Articles Amendments

In connection with the merger, Global Payments’ articles of incorporation will be amended to increase the number of authorized shares of Global Payments common stock from 200 million to 400 million. A copy of the Global Payments authorized share count articles amendment is attached to this joint proxy statement/prospectus as Annex F.

In addition, in connection with the merger, Global Payments is asking its shareholders to approve an amendment to Global Payments’ articles of incorporation to declassify the Global Payments board of directors and provide for annual elections of directors, effective only upon the completion of the merger and effective as of the effective time. If Global Payments shareholders approve the Global Payments declassification proposal and the merger is completed, the bylaws of Global Payments will be amended to reflect conforming changes and the declassification of the board of directors. A copy of the Global Payments declassification articles amendment is attached to this joint proxy statement/prospectus as Annex G. Approval of the Global Payments declassification articles amendment is not a condition to the completion of the merger.



 

17


Table of Contents

The articles of incorporation of Global Payments as in effect immediately prior to the effective time, as amended as described above, will be the articles of incorporation of the combined company, until thereafter amended in accordance with applicable law.

Bylaws

Prior to closing, the Global Payments board of directors will take all actions necessary to cause the bylaws of Global Payments to be amended as set forth in Exhibit A-2 to the merger agreement (such amendment, the “Global Payments bylaw amendment”), and as so amended, effective upon the completion of the merger, the bylaws of Global Payments will be the bylaws of the combined company, until thereafter amended in accordance with applicable law. The bylaws of Global Payments, as amended pursuant to the merger agreement, implement certain governance matters for the combined company following completion of the merger. In addition, subject to the approval of the Global Payments declassification proposal by the Global Payments shareholders and the effectiveness of the Global Payments declassification articles amendment, the bylaws of Global Payments will be correspondingly amended to give effect to the Global Payments declassification articles amendment.

Board of Directors

The board of directors of the combined company as of the effective time will have twelve (12) members, consisting of:

 

   

six (6) continuing Global Payments directors, which will include Jeffrey S. Sloan, the current Chief Executive Officer of Global Payments, and William I Jacobs, the current Chairman of Global Payments; and

 

   

six (6) continuing TSYS directors, which will include M. Troy Woods, the current Chairman, President and Chief Executive Officer of TSYS, and Kriss Cloninger III, the current Lead Director of TSYS.

The Global Payments bylaw amendment provides that from and after the effective time and until the date of the annual meeting of shareholders held in 2022, the number of directors that comprises the entire board of directors of the combined company will be twelve (12) and no vacancy on the board of directors of the combined company created by the resignation, retirement, disqualification, removal from office or death of a director will be filled by the board of directors of the combined company, and the board of directors of the combined company will not nominate any individual to fill such vacancy, unless, in the case of a vacancy created by the resignation, retirement, disqualification, removal from office or death of a continuing Global Payments director, not less than a majority of the continuing Global Payments directors then in office have approved the appointment or nomination (as applicable) to fill such vacancy and, in the case of a vacancy created by the resignation, retirement, disqualification, removal from office or death of a continuing TSYS director, not less than a majority of the continuing TSYS directors then in office have approved the appointment or nomination (as applicable) to fill such vacancy; provided that any such appointment or nomination will be made in accordance with applicable law and the rules of the NYSE (or other national securities exchange on which the combined company’s securities are listed). The “continuing Global Payments directors” means the initial Global Payments directors serving on the combined company’s board of directors as of the effective time and any directors who were subsequently appointed or nominated and elected to fill a vacancy created by the resignation, retirement, disqualification, removal from office or death of an initial Global Payments director (or another continuing Global Payments director) as described above, and the “continuing TSYS directors” means the initial TSYS directors serving on the combined company’s board of directors as of the effective time and any directors who were subsequently appointed or nominated and elected to fill a vacancy created by the resignation, retirement, disqualification, removal from office or death of an initial TSYS director (or another continuing TSYS director) as described above.



 

18


Table of Contents

From and after the effective time and until the date of the annual meeting of shareholders held in 2022, any amendment to the bylaw provisions implementing the above arrangements will require the affirmative vote of at least seventy-five percent (75%) of the entire board of directors of the combined company.

In the event that the Global Payments declassification articles amendment is not adopted as of the effective time, Global Payments and TSYS will cooperate reasonably and in good faith in an effort to apportion the continuing Global Payments directors, on the one hand, and the continuing TSYS directors, on the other hand, as nearly evenly as is practicably possible among the different classes of the board of directors of the combined company as of the effective time so that as nearly equal a number of the continuing Global Payments directors, on the one hand, and the continuing TSYS directors, on the other hand, as is practicably possible stand for election at the first annual meeting of shareholders of the combined company following the effective time.

Committees of the Board of Directors

The Global Payments bylaw amendment provides that from and after the effective time and until the date of the annual meeting of shareholders held in 2022, the board of directors of the combined company will have four standing committees: an Audit Committee, a Compensation Committee, a Technology Committee, and a Governance and Nominating Committee; the chairperson of each of the Audit Committee and Compensation Committee will be designated by Global Payments from among the continuing Global Payments directors; the chairperson of each of the Technology Committee and Governance and Nominating Committee will be designated by TSYS from among the continuing TSYS directors; and the membership of the committees will be, as practicably as possible, evenly split between the continuing Global Payments directors and the continuing TSYS directors.

From and after the effective time and until the date of the annual meeting of shareholders held in 2022, any amendment to the bylaw provisions implementing the above arrangements will require the affirmative vote of at least seventy-five percent (75%) of the entire board of directors of the combined company.

Chief Executive Officer

Following the completion of the merger, Jeffrey S. Sloan, the current Chief Executive Officer of Global Payments, will continue to serve as the Chief Executive Officer of the combined company.

Chairman and Lead Independent Director

The Global Payments bylaw amendment provides that from and after the effective time and until the date of the annual meeting of shareholders held in 2022 or his earlier resignation, retirement, disqualification, removal from office or death, (a) M. Troy Woods, the current Chairman, President and Chief Executive Officer of TSYS, will serve as the Chairman of the combined company’s board of directors and (b) Kriss Cloninger III, the current Lead Director of TSYS, will serve as the Lead Independent Director of the combined company’s board of directors.

From and after the effective time and until the date of the annual meeting of shareholders held in 2022, M. Troy Woods may not be removed as Chairman and Kriss Cloninger III may not be removed as the Lead Independent Director by the board of directors of the combined company without the affirmative vote of at least seventy-five percent (75%) of the entire board of directors of the combined company.

From and after the effective time and until the date of the annual meeting of shareholders held in 2022, any amendment to the bylaw provisions implementing the above arrangements will require the affirmative vote of at least seventy-five percent (75%) of the entire board of directors of the combined company.



 

19


Table of Contents

Headquarters and Name of the Combined Company After the Merger

Effective as of the effective time, the combined company will maintain dual headquarters in Atlanta, Georgia, and Columbus, Georgia. The name of the combined company will be “Global Payments Inc.” and the combined company’s issuer processing business conducted by TSYS prior to the effective time will continue to be conducted under the TSYS name.

Regulatory Approvals (page [    ])

Subject to the terms of the merger agreement, Global Payments and TSYS have agreed to cooperate with each other and use reasonable best efforts to (i) take, or cause to be taken, all necessary actions and do, or cause to be done, all things necessary, proper or advisable to consummate and make effective the transactions contemplated by the merger agreement as promptly as practicable following the date of the merger agreement, (ii) make, or cause to be made, the registrations, declarations and filings required under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 and the rules and regulations promulgated thereunder (the “HSR Act”) and required or advisable under any other applicable competition laws with respect to the transactions contemplated by the merger agreement, (iii) prepare and file all necessary documentation to obtain as promptly as practicable all material permits, consents, approvals, clearances and authorizations of all third parties and governmental entities which are necessary or advisable to consummate the transactions contemplated by the merger agreement, and to comply with the terms and conditions of all such permits, consents, approvals, clearances and authorizations of all such governmental entities and (iv) seek to avoid or prevent the initiation of any investigation, claim, action, suit, arbitration, litigation or proceeding by or before any governmental entity challenging the merger agreement or the consummation of the transactions contemplated by the merger agreement.

On June 26, 2019, Global Payments and TSYS received early termination of the HSR waiting period. Although Global Payments and TSYS expect that all additional required regulatory clearances and approvals will be obtained, the parties cannot assure you that these regulatory clearances and approvals will be timely obtained or obtained at all, or that the granting of these regulatory clearances and approvals will not involve the imposition of additional conditions on the completion of the merger, including the requirement to divest assets, or require changes to the terms of the merger agreement. These conditions or changes could result in the conditions to the closing of the merger not being satisfied.

Description of Financing (page [    ])

Consummation of the merger is not conditioned on Global Payments’ ability to obtain financing. Global Payments plans to use debt financing and cash on hand to refinance certain of its existing indebtedness and certain existing indebtedness of TSYS, as well as to fund certain fees and expenses relating to the merger. Such debt financing could take any of several forms or any combination of them, including but not limited to the following: (1) Global Payments may borrow under the bridge facility (as described below); (2) Global Payments may borrow up to $3.0 billion under the term loan credit agreement (as described below); (3) Global Payments may borrow up to $3.0 billion under the revolving credit agreement (as described below); and (4) Global Payments may issue senior notes in the public and/or private capital markets.

In connection with entry into the merger agreement, Global Payments entered into certain commitment and engagement letters, which we refer to collectively as the “commitment letters,” dated as of May 27, 2019, with Bank of America, N.A. and certain other banks party thereto, which we refer to as the “banks,” pursuant to which the banks have committed, subject to the terms and conditions of the commitment letters, (1) to provide a bridge facility in an aggregate amount equal to $2.75 billion, which we refer to as the “bridge facility,” the commitments for which will reduce if Global Payments obtains certain other debt financing, completes certain asset sales (subject to customary reinvestment rights) and completes certain equity issuances, in each case, in an amount equal to the net proceeds thereof, subject to a minimum proceeds threshold, (2) to arrange a term loan



 

20


Table of Contents

facility, which we refer to as the “term loan facility,” in an aggregate amount of up to $3.0 billion, and (3) to arrange a revolving credit facility, which we refer to as the “revolving facility,” in an aggregate amount equal to $3.0 billion. We refer to the bridge facility, the term loan facility and the revolving facility collectively as the “facilities.” The commitment letters also provide for the underwriting of a senior notes offering, which may be pursuant to a registered public offering or in a private placement. We refer to the facilities and such potential offering collectively as the “debt financing.”

Pursuant to the terms of the commitment letters, the proceeds of the debt financing may be used (a) to refinance certain outstanding indebtedness of Global Payments and TSYS, (b) to pay any cash payments in lieu of fractional shares payable in accordance with the terms of the merger agreement, (c) to pay the related transaction fees and expenses and (d) in the case of the term loan facility, the revolving facility and the senior notes, for general corporate purposes.

The commitments to provide the financing under the commitment letters will terminate upon the first to occur of (i) the effectiveness of the definitive documentation for the applicable facility, (ii) the consummation of the merger and the refinancing of existing indebtedness of Global Payments and TSYS without using the loans available under the bridge facility, (iii) the date on which the merger agreement is terminated in accordance with its terms, (iv) receipt by the bank of written notice from Global Payments of its election to terminate all commitments under the bridge facility in full and (v) 11:59 p.m. (New York City time) on the termination date (as defined in the merger agreement), as it may be extended in accordance with the terms of the merger agreement.

The availability of the debt financing may not be considered assured. The obligation of the commitment parties to provide debt financing under the commitment letters, and the lenders to provide loans under the term loan credit agreement and the revolving credit agreement is subject to a number of customary conditions, including entry into definitive documentation. There is a risk that these conditions will not be satisfied and the debt financing may not be available when required.

For a more complete description of Global Payments’ debt financing for the merger, see the section entitled “Description of Financing” beginning on page [     ].

Expected Timing of the Merger

Global Payments and TSYS expect the merger to close in the fourth quarter of 2019. However, neither Global Payments nor TSYS can predict the actual date on which the merger will be completed, or if the merger will be completed at all, because completion is subject to conditions and factors outside the control of both companies. Global Payments and TSYS must first obtain the approval of holders of Global Payments common stock and holders of TSYS common stock for the merger, as well as obtain necessary regulatory approvals and satisfy certain other closing conditions.

Conditions to Completion of the Merger (page [    ])

As more fully described in this joint proxy statement/prospectus and in the merger agreement, the completion of the merger depends on a number of conditions being satisfied or, where legally permissible, waived. These conditions include:

 

   

approval of the merger agreement by the shareholders of Global Payments by the requisite Global Payments vote and by the shareholders of TSYS by the requisite TSYS vote;

 

   

authorization for listing on the NYSE, subject to official notice of issuance, of the shares of Global Payments common stock to be issued in the merger;



 

21


Table of Contents
   

any waiting period applicable to the merger under the HSR Act having expired or been terminated and all other requisite regulatory approvals having been obtained and remaining in full force and effect, and all statutory waiting periods in respect thereof having expired or been terminated;

 

   

effectiveness of the registration statement of which this joint proxy statement/prospectus is part, and the absence of any stop order suspending the effectiveness of the registration statement, or proceedings for such purpose initiated or threatened by the SEC and not withdrawn;

 

   

no order, injunction or decree issued by any court or governmental entity of competent jurisdiction or other legal restraint or prohibition preventing the completion of the merger or making the completion of the merger illegal;

 

   

subject to materiality standards provided in the merger agreement, the accuracy of the representations and warranties of Global Payments and TSYS in the merger agreement;

 

   

performance in all material respects by each of Global Payments and TSYS of their respective obligations, covenants and agreements under the merger agreement; and

 

   

receipt by each of TSYS and Global Payments of an opinion from counsel as to certain tax matters.

Termination of the Merger Agreement (page [    ])

The merger agreement may be terminated at any time prior to the completion of the merger, whether before or after the receipt of the requisite Global Payments shareholder vote or requisite TSYS shareholder vote, in the following circumstances:

 

   

by mutual written consent of Global Payments and TSYS;

 

   

by either Global Payments or TSYS if any governmental entity that must grant a requisite regulatory approval has denied approval of the merger and such denial has become final and nonappealable or any governmental entity of competent jurisdiction has issued a final and nonappealable order, injunction, decree or other legal restraint or prohibition permanently enjoining or otherwise prohibiting or making illegal the completion of the merger, unless the failure to obtain a requisite regulatory approval or the issuance of any such order, injunction, decree, or other legal restraint or prohibition is due to the failure of the party seeking to terminate the merger agreement to perform or observe its obligations, covenants and agreements set forth in the merger agreement;

 

   

by either Global Payments or TSYS if the merger has not been completed on or before May 27, 2020 (the “initial termination date” and, as it may be extended below, the “termination date”) provided that, if, on the initial termination date, any of the requisite regulatory approvals have not been obtained and all of the other conditions precedent set forth in the merger agreement have been satisfied or waived (other than those conditions that by their nature can only be satisfied at the closing, but subject to the satisfaction or waiver thereof assuming such date were the closing date), the initial termination date may be extended by either party to August 27, 2020 (the “extended termination date”) on written notice to the other party on or by the initial termination date; provided further that, notwithstanding the foregoing, if the failure of the closing to occur by the initial termination date or the extended termination date, as applicable, is due to the failure of the party seeking to terminate the merger agreement or to extend the termination date, as applicable, to perform or observe its obligations, covenants and agreements under the merger agreement, such party will not have such right to seek to terminate the merger agreement or to extend the termination date;

 

   

by either Global Payments or TSYS (provided that the terminating party is not then in material breach of any representation, warranty, obligation, covenant or other agreement contained in the merger agreement) if there is a breach of any of the obligations, covenants or agreements or any of the



 

22


Table of Contents
 

representations or warranties (or if any such representation or warranty ceases to be true) set forth in the merger agreement on the part of TSYS, in the case of a termination by Global Payments, or Global Payments, in the case of a termination by TSYS, which breach or failure to be true, either individually or in the aggregate with all other breaches by such party (or failures of such representations or warranties to be true), would constitute, if occurring or continuing on the closing date, the failure of an applicable closing condition of the terminating party and which is not cured within forty-five (45) days following written notice to the other party, or by its nature or timing cannot be cured during such period (or such fewer days as remain prior to the termination date);

 

   

by TSYS, if (1) Global Payments or the Global Payments board of directors has made a recommendation change or (2) Global Payments or the Global Payments board of directors breaches in any material respect its obligations relating to non-solicitation of acquisition proposals or its obligations related to shareholder approval and the Global Payments board of directors’ recommendation; or

 

   

by Global Payments, if (1) TSYS or the TSYS board of directors has made a recommendation change or (2) TSYS or the TSYS board of directors breaches in any material respect its obligations relating to non-solicitation of acquisition proposals or its obligations related to shareholder approval and the TSYS board of directors recommendation.

Termination Fee (page [    ])

If the merger agreement is terminated by either Global Payments or TSYS under certain circumstances, including circumstances involving alternative acquisition proposals and changes in the recommendation by TSYS or Global Payments or their respective boards, TSYS or Global Payments may be required to pay a termination fee to the other equal to $860 million.

Accounting Treatment (page [    ])

Global Payments and TSYS each prepare their respective financial statements in accordance with accounting principles generally accepted in the United States (“GAAP”). The merger will be accounted for using the acquisition method of accounting, and Global Payments will be treated as the accounting acquirer.

The Rights of Holders of TSYS Common Stock Will Change as a Result of the Merger (page [    ])

Holders of TSYS common stock will have different rights once they become holders of common stock of the combined company due to differences between the TSYS governing documents and the Global Payments governing documents. These differences are described in more detail under the section entitled “Comparison of Shareholders’ Rights” beginning on page [    ].

Listing of Global Payments Common Stock; Delisting and Deregistration of TSYS Common Stock (page [    ])

The shares of Global Payments common stock to be issued in the merger will be listed for trading on the NYSE. Following the merger, shares of Global Payments common stock will continue to be traded on the NYSE. Upon completion of the merger, TSYS common stock will be delisted from the NYSE and deregistered under the Exchange Act.



 

23


Table of Contents

The Global Payments Special Meeting (page [    ])

The Global Payments special meeting will be held at [            ] on [                    ], 2019, at [            ], local time. At the Global Payments special meeting, holders of Global Payments common stock will be asked to vote on the following matters:

 

   

approval of the Global Payments merger proposal;

 

   

approval of the Global Payments authorized share count proposal;

 

   

approval of the Global Payments declassification proposal; and

 

   

approval of the Global Payments adjournment proposal.

You may vote at the Global Payments special meeting if you owned shares of Global Payments common stock at the close of business on [                    ], 2019. On that date there were [            ] shares of Global Payments common stock outstanding, approximately [    ]% of which were owned and entitled to be voted by Global Payments’ directors and executive officers and their affiliates. We currently expect that Global Payments’ directors and executive officers will vote their shares in favor of the merger agreement and the other proposals to be considered at the Global Payments special meeting, although none of them has entered into any agreements obligating them to do so.

The Global Payments merger proposal will be approved if a majority of all the votes entitled to be cast on the merger agreement by the holders of Global Payments common stock are voted in favor of such proposal. The Global Payments authorized share count proposal will be approved if a majority of all the votes entitled to be cast on the authorized share count proposal by the holders of Global Payments common stock are voted in favor of such proposal. The Global Payments declassification proposal will be approved if two-thirds (2/3) of the outstanding shares of Global Payments common stock entitled to vote on such matter are voted in favor of such proposal. The Global Payments adjournment proposal will be approved if a majority of the shares of Global Payments common stock represented at the Global Payments special meeting are voted in favor of such proposal, whether or not a quorum is present. If you mark “ABSTAIN” on your proxy, fail to submit a proxy or vote in person at the Global Payments special meeting or fail to instruct your bank, broker or other nominee how to vote with respect to the Global Payments merger proposal, the Global Payments authorized share count proposal or the Global Payments declassification proposal, it will have the same effect as a vote “AGAINST” the Global Payments merger proposal, the Global Payments authorized share count proposal or the Global Payments declassification proposal, as applicable. If you mark “ABSTAIN” on your proxy with respect to the Global Payments adjournment proposal, it will have the same effect as a vote “AGAINST” the Global Payments adjournment proposal. If you fail to submit a proxy or vote in person at the Global Payments special meeting or fail to instruct your bank or broker how to vote with respect to the Global Payments adjournment proposal, your shares will not be deemed to be represented with respect to the Global Payments adjournment proposal and it will have no effect on the Global Payments adjournment proposal.

The TSYS Special Meeting (page [    ])

The TSYS special meeting will be held at [            ] on [                    ], 2019, at [            ], local time. At the TSYS special meeting, holders of TSYS common stock will be asked to vote on the following matters:

 

   

approval of the TSYS merger proposal;

 

   

approval of the TSYS compensation proposal;

 

   

approval of the TSYS declassification proposal; and

 

   

approval of the TSYS adjournment proposal.



 

24


Table of Contents

You may vote at the TSYS meeting if you owned shares of TSYS common stock at the close of business on [                    ], 2019. On that date there were [            ] shares of TSYS common stock outstanding, approximately [    ]% of which were owned and entitled to be voted by TSYS’ directors and executive officers and their affiliates. We currently expect that TSYS’ directors and executive officers will vote their shares in favor of the merger agreement and the other proposals to be considered at the TSYS special meeting, although none of them has entered into any agreements obligating them to do so.

The TSYS merger proposal will be approved if a majority of all the votes entitled to be cast on the merger agreement by the holders of TSYS common stock are voted in favor of such proposal. The TSYS compensation proposal will be approved if a majority of the votes cast at the TSYS special meeting on the compensation proposal are voted in favor of such proposal. The TSYS declassification proposal will be approved if a majority of the votes cast at the TSYS special meeting on the TSYS declassification proposal are voted in favor of such proposal. For these purposes, a majority of the votes cast means that the votes cast in favor of the matter exceed the votes cast against the matter. The TSYS adjournment proposal will be approved if a majority of the shares of TSYS common stock represented at the TSYS special meeting are voted in favor of such proposal, whether or not a quorum is present. If you mark “ABSTAIN” on your proxy, fail to submit a proxy or vote in person at the TSYS special meeting or fail to instruct your bank, broker or other nominee how to vote with respect to the TSYS merger proposal, it will have the same effect as a vote “AGAINST” the TSYS merger proposal. If you mark “ABSTAIN” on your proxy, fail to submit a proxy or vote in person at the TSYS special meeting or fail to instruct your bank, broker or other nominee how to vote with respect to the TSYS compensation proposal or the TSYS declassification proposal, you will not be deemed to have cast a vote with respect to the TSYS compensation proposal or the TSYS declassification proposal and it will have no effect on the TSYS compensation proposal or the TSYS declassification proposal. If you mark “ABSTAIN” on your proxy with respect to the TSYS adjournment proposal, it will have the same effect as a vote “AGAINST” the TSYS adjournment proposal. If you fail to submit a proxy or vote in person at the TSYS special meeting or fail to instruct your bank, broker or other nominee how to vote with respect to the TSYS adjournment proposal, your shares will not be deemed to be represented with respect to the TSYS adjournment proposal, and it will have no effect on the TSYS adjournment proposal.

Risk Factors (page [    ])

In evaluating the merger agreement and the merger, including the issuance of shares of Global Payments common stock in the merger, you should carefully read this joint proxy statement/prospectus and give special consideration to the factors discussed in the section entitled “Risk Factors” beginning on page [    ].



 

25


Table of Contents

SELECTED CONSOLIDATED HISTORICAL FINANCIAL DATA OF GLOBAL PAYMENTS

The following table presents selected consolidated historical financial data of Global Payments. The selected consolidated historical financial data as of and for the years ended December 31, 2018 and 2017, the seven months ended December 31, 2016, and the year ended May 31, 2016, have been derived from Global Payments’ audited consolidated financial statements and accompanying notes contained in Global Payments’ Annual Report on Form 10-K for the year ended December 31, 2018, which is incorporated into this joint proxy statement/prospectus by reference, and the selected consolidated historical financial data as of and for the years ended May 31, 2015 and 2014 have been derived from Global Payments’ audited consolidated financial statements and accompanying notes filed with the SEC and not included or incorporated by reference in this joint proxy statement/prospectus. The selected consolidated historical financial data as of and for the three months ended March 31, 2019 and 2018 have been derived from Global Payments’ unaudited consolidated financial statements contained in Global Payments’ Quarterly Report on Form 10-Q for the period ended March 31, 2019, which is incorporated into this joint proxy statement/prospectus by reference, and its Quarterly Report on Form 10-Q for the period ended March 31, 2018, which is not included or incorporated by reference in this joint proxy statement/prospectus. Historical financial data as of and for the three months ended March 31, 2019 and 2018 are unaudited and include, in Global Payments management’s opinion, all known adjustments necessary for a fair presentation of the results of operations and financial condition of Global Payments. These adjustments consist of normal recurring accruals and estimates that affect the carrying amount of assets and liabilities. You should not assume the results of operations for past periods are indicative of results for any future periods.

The information set forth below is only a summary. You should read the selected financial data set forth below in conjunction with (i) “Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations,” (ii) “Item 8—Financial Statements and Supplementary Data” and (iii) the historical consolidated financial statements of Global Payments and the related notes presented in Global Payments’ Annual Report on Form 10-K for the year ended December 31, 2018, which is incorporated by reference into this joint proxy statement/prospectus. You should also read this information in conjunction with the historical consolidated financial statements of Global Payments and related notes presented in Global Payments’ Quarterly Reports on Form 10-Q for the period ended March 31, 2019 and March 31, 2018. Global Payments’ historical consolidated financial information may not be indicative of the future performance of Global Payments or the combined company. For more information, see the section entitled “Where You Can Find More Information” beginning on page [    ].

 

    Three Months Ended
March 31,
    Year Ended
December 31,
    Seven
Months
Ended
December 31,

2016
    Year Ended May 31  
(in thousands, except per share
data)
  2019     2018     2018     2017     2016     2015     2014  

Income statement data:

               

Revenues

  $ 883,039     $ 794,977     $ 3,366,366     $ 3,975,163     $ 2,202,896     $ 2,898,150     $ 2,773,718     $ 2,554,236  

Operating income

    199,492       156,170       737,055       558,868       237,951       424,944       456,597       405,499  

Net income

    119,205       97,586       484,667       494,070       137,683       290,217       309,115       269,952  

Net income attributable to Global Payments

    112,341       91,399       452,053       468,425       124,931       271,666       278,040       245,286  

Per share data:

               

Basic earnings per share

  $ 0.71     $ 0.57     $ 2.85     $ 3.03     $ 0.81     $ 2.05     $ 2.07     $ 1.70  

Diluted earnings per share

    0.71       0.57       2.84       3.01       0.81       2.04       2.06       1.69  

Dividends per share

    0.01       0.01       0.04       0.04       0.02       0.04       0.04       0.04  

Balance sheet data (at period end):

               

Total assets

  $ 14,749,621     $ 12,903,297     $ 13,230,774     $ 12,998,069     $ 10,664,350     $ 10,509,952     $ 5,779,301     $ 4,002,527  

Settlement lines of credit

    641,906       447,617       700,486       635,166       392,072       378,436       592,629       440,128  

Long-term debt

    5,303,396       4,284,330       5,130,243       4,659,716       4,438,612       4,515,286       1,740,067       1,390,507  

Total equity

    4,142,461       4,139,790       4,186,343       3,965,231       2,779,342       2,877,404       863,553       1,132,799  


 

26


Table of Contents
(1)

On January 1, 2018, Global Payments adopted Accounting Standards Update 2014-09, “Revenues from Contracts with Customers (Topic 606),” as well as other clarifications and technical guidance issued by the Financial Accounting Standards Board related to this new revenue standard (“ASC 606”). The new standard changed the presentation of certain amounts that Global Payments pays to third parties that were previously presented as operating expenses. Effective with the adoption of the new standard, network fees are recognized as a reduction to revenue. This change in presentation of fees paid to third parties reduces reported revenues and operating expenses under GAAP by the same amount and has no effect on operating income.

(2)

On January 1, 2019, Global Payments adopted ASU 2016-02, “Leases,” as well as other related clarifications and interpretive guidance, which requires recognition of assets and liabilities for the rights and obligations created by leases. The adoption of ASU 2016-02 resulted in the measurement and recognition of lease liabilities in the amount of $274 million and right-of-use assets in the amount of $236 million as of January 1, 2019.

(3)

The selected financial data in the table above reflect the effects of acquisitions and borrowings to fund certain of those acquisitions.

(4)

Operating income, net income, net income attributable to Global Payments and basic and diluted earnings per share in the table above reflect acquisition and integration expenses of $5.3 million and $18.3 million, respectively, during the three months ended March 31, 2019 and 2018 and $56.1 million for the year ended December 31, 2018, $94.6 million for the year ended December 31, 2017, $91.6 million for the 2016 fiscal transition period and $51.3 million for the year ended May 31, 2016.

(5)

Net income, net income attributable to Global Payments and basic and diluted earnings per share in the table above also reflect:

(a) the effects of a net income tax benefit of $23.3 million in connection with adjustments made to accounting estimates associated with the U.S. Tax Cut and Jobs Act of 2017 (“the 2017 U.S. Tax Act) for the year ended December 31, 2018 and a provisional net income tax benefit of $158.7 million recorded in connection with the 2017 U.S. Tax Act for the year ended December 31, 2017, and

(b) a gain of $41.2 million recorded in connection with the sale of membership interests in Visa Europe Limited for the seven months ended December 31, 2016.



 

27


Table of Contents

SELECTED CONSOLIDATED HISTORICAL FINANCIAL DATA OF TSYS

The following table presents selected consolidated historical financial data of TSYS. The selected consolidated historical financial data as of December 31, 2018 and 2017, and for the years ended December 31, 2018, 2017 and 2016, have been derived from TSYS’ audited consolidated financial statements and accompanying notes contained in TSYS’ Annual Report on Form 10-K for the year ended December 31, 2018, which is incorporated into this joint proxy statement/prospectus by reference. The selected consolidated historical financial data as of December 31, 2016, 2015 and 2014, and for the years ended December 31, 2015 and 2014, have been derived from TSYS’ audited consolidated financial statements for such years and accompanying notes, which are not incorporated into this joint proxy statement/prospectus by reference. The selected consolidated historical financial data for TSYS as of March 31, 2019 and for the three months ended March 31, 2019 and 2018 has been derived from TSYS’ unaudited interim consolidated financial statements contained in its Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2019, which is incorporated into this joint proxy statement/prospectus by reference. In TSYS’ opinion, such unaudited financial statements include all adjustments necessary for a fair presentation of the interim March 31, 2019 and 2018 financial information. Interim results for the three months ended March 31, 2019 are not necessarily indicative of, and are not projections for, the results to be expected for the year ending December 31, 2019.

The information set forth below is only a summary. You should read the following information together with TSYS’ consolidated financial statements and accompanying notes and the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained in TSYS’ Annual Report on Form 10-K for the year ended December 31, 2018, which is incorporated by reference into this joint proxy statement/prospectus, in TSYS’ Quarterly Report on Form 10-Q for the period ended March 31, 2019, which is incorporated into this joint proxy statement/prospectus by references, and in TSYS’ other reports filed with the SEC. TSYS’ historical consolidated financial information may not be indicative of the future performance of TSYS or the combined company. For more information, see the section entitled “Where You Can Find More Information” beginning on page [    ].

 

    Three months Ended March 31,     Year Ended December 31,  
(in thousands, except per share data)           2019                     2018             2018     2017     2016     2015     2014  

Income Statement Data:

             

Total revenues*

  $ 1,034,531     $ 987,170     $ 4,028,211     $ 4,927,965     $ 4,170,077     $ 2,779,541     $ 2,446,877  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

  $ 223,270     $ 188,271     $ 822,738     $ 734,044     $ 573,382     $ 534,107     $ 431,640  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income from continuing operations, net of tax

  $ 161,607     $ 143,102     $ 577,917     $ 592,216     $ 325,972     $ 367,630     $ 280,751  

Income from discontinued operations, net of tax

    —         —         —         —         —       $ 1,411     $ 48,655  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income

  $ 161,607     $ 143,102     $ 577,917     $ 592,216     $ 325,972     $ 369,041     $ 329,406  

Net income attributable to noncontrolling interests

    —       $ (1,261   $ (1,261   $ (6,031   $ (6,334   $ (4,997   $ (6,534
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income attributable to TSYS common shareholders

  $ 161,607     $ 141,841     $ 576,656     $ 586,185     $ 319,638     $ 364,044     $ 322,872  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Basic earnings per share (EPS)** attributable to TSYS common shareholders:

             

Income from continuing operations

  $ 0.91     $ 0.78     $ 3.17     $ 3.19     $ 1.74     $ 1.97     $ 1.48  

Gain from discontinued operations***

    —         —         —         —         —       $ 0.01     $ 0.26  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income

  $ 0.91     $ 0.78     $ 3.17     $ 3.19     $ 1.74     $ 1.98     $ 1.73  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Diluted EPS** attributable to TSYS common shareholders:

             

Income from continuing operations

  $ 0.90     $ 0.77     $ 3.14     $ 3.16     $ 1.73     $ 1.96     $ 1.47  

Gain from discontinued operations***

    —         —         —         —         —       $ 0.01     $ 0.25  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income

  $ 0.90     $ 0.77     $ 3.14     $ 3.16     $ 1.73     $ 1.97     $ 1.72  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Cash dividends declared per share

  $ 0.13     $ 0.13     $ 0.52     $ 0.46     $ 0.40     $ 0.40     $ 0.40  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 


 

28


Table of Contents
*

TSYS adopted the new revenue guidance under Accounting Standards Update 2014-09 (ASC 606) as of January 1, 2018.

**

Basic and diluted EPS amounts for continuing operations and net income may not total due to rounding.

***

TSYS sold all of its stock of GP Network Corporation (representing 54% ownership of the company) and all of its stock of TSYS Japan Godo Kaisha (representing 100% ownership of the company) in April 2014. In 2015, TSYS recorded an additional gain of $1.4 million, net of tax, related to the return of cash that was placed in escrow during closing and tax adjustments associated with the transaction.

 

    As of March 31,     As of December 31,  
(in thousands)   2019     2018     2018     2017     2016     2015     2014  

Balance Sheet Data:

             

Total assets

  $ 7,774,132     $ 7,531,717     $ 7,468,709     $ 6,331,689     $ 6,366,177     $ 3,877,895     $ 3,725,652  

Obligations under long-term borrowings, finance leases and license agreements, excluding current portion

  $ 4,180,733     $ 3,326,536     $ 3,889,541     $ 2,628,002     $ 3,313,276     $ 1,377,541     $ 1,397,483  


 

29


Table of Contents

SELECTED UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

The following tables present unaudited pro forma condensed combined financial information about the combined company’s consolidated balance sheet and statement of income after giving effect to the merger. The information under “Unaudited Pro Forma Condensed Combined Balance Sheet Data” in the table below gives effect to the merger as if it had taken place on March 31, 2019. The information under “Unaudited Pro Forma Condensed Combined Income Statement Data” in the table below gives effect to the merger as if it had taken place on January 1, 2018, the beginning of the earliest period presented. This selected unaudited pro forma condensed combined financial information was prepared using the acquisition method of accounting where Global Payments is considered the acquirer of TSYS for accounting purposes. See the section entitled “The Merger—Accounting Treatment” beginning on page [    ].

This selected unaudited pro forma condensed combined financial information has been prepared for illustrative purposes only and is based on currently available information and assumptions and estimates considered appropriate by Global Payments management; however, it is not necessarily indicative of what the combined company’s consolidated financial condition or results of operations actually would have been assuming the merger had been completed as of the dates indicated, nor does it purport to represent the combined company’s consolidated balance sheet or statement of income for future periods. The unaudited pro forma condensed combined financial information includes adjustments that are preliminary and may be revised. There can be no assurance that such revisions will not result in material changes. Future results may vary significantly from the results reflected due to various factors, including those discussed in the section entitled “Risk Factors” beginning on page [    ]. The information presented below should be read in conjunction with the historical consolidated financial statements of Global Payments and TSYS, including the related notes, filed by each of them with the SEC, in addition to the unaudited pro forma condensed combined financial information of Global Payments and TSYS, including the related notes appearing elsewhere in this joint proxy statement/prospectus. See the sections entitled “Where You Can Find More Information” and “Unaudited Pro Forma Condensed Combined Financial Information” beginning on pages [    ] and [    ], respectively, of this joint proxy statement/prospectus.

 

     Three Months Ended
March 31, 2019
     Year Ended
December 31, 2018
 
     (in thousands, except per share data)  

Unaudited Pro Forma Condensed Combined Income Statement Data:

     

Revenues

   $ 1,909,190      $ 7,357,876  

Operating income

     300,403        1,087,152  

Net income attributable to controlling shareholders

     189,474        664,519  

Net income per share:

     

Basic

   $ 0.63      $ 2.20  

Diluted

   $ 0.63      $ 2.20  

 

     As of
March 31, 2019
 
     (in thousands)  

Unaudited Pro Forma Condensed Combined Balance Sheet Data:

  

Total assets

   $ 44,695,587  

Long-term debt

     9,643,091  

Total liabilities

     17,966,219  

Total equity

     26,729,368  


 

30


Table of Contents

COMPARATIVE HISTORICAL AND UNAUDITED PRO FORMA PER SHARE DATA

The historical per share data for Global Payments and TSYS below has been derived from the audited consolidated financial statements of each of Global Payments and TSYS as of and for the year ended December 31, 2018, each of which is incorporated by reference herein, and the unaudited consolidated financial statements of each of Global Payments and TSYS as of and for the three (3) months ended March 31, 2019.

The unaudited pro forma and pro forma combined equivalent per share data set forth below gives effect to the merger as if it had occurred on January 1, 2018, the beginning of the earliest period presented, in the case of earnings per share data, and as of March 31, 2019, in the case of book value per share data, assuming that each outstanding share of TSYS common stock had been converted into shares of Global Payments common stock based on the exchange ratio of 0.8101 shares of Global Payments common stock for each share of TSYS common stock. The unaudited pro forma combined per share data has been derived from the “Unaudited Pro Forma Condensed Combined Financial Information” beginning on page [    ].

The unaudited pro forma combined per share data has been derived using the acquisition method of accounting. See the section entitled “Unaudited Pro Forma Condensed Combined Financial Information” beginning on page [    ] for more information. Accordingly, the pro forma adjustments reflect the assets and liabilities of TSYS at their preliminary estimated fair values. Differences between these preliminary estimates and the final values in acquisition accounting will occur and these differences could have a material effect on the unaudited pro forma combined per share information set forth below.

The unaudited pro forma combined per share data does not purport to represent the actual results of operations that the combined company would have achieved had the merger been completed during these periods or to project the future results of operations that the combined company may achieve after the merger.

The unaudited pro forma combined per share equivalent data set forth below shows the effect of the merger from the perspective of an owner of TSYS common stock. The information was calculated by multiplying the unaudited pro forma combined per share data by the exchange ratio of 0.8101.

You should read the information below in conjunction with the selected consolidated historical financial data included elsewhere in this joint proxy statement/prospectus and the historical consolidated financial statements of Global Payments and TSYS and related notes that have been filed with the SEC, certain of which are incorporated by reference herein. See the sections entitled “Selected Consolidated Historical Financial Data of Global Payments”, “Selected Consolidated Historical Financial Data of TSYS” and “Where You Can Find More Information” beginning on pages [    ], [    ] and [    ], respectively. The unaudited pro forma combined per share data has been derived from, and should be read in conjunction with, the unaudited pro forma condensed combined financial statements and related notes included in this joint proxy statement/prospectus. See the sections entitled “Unaudited Pro Forma Condensed Combined Financial Information” beginning on page [    ], which are based on and should be read in conjunction with (i) the historical audited consolidated financial statements of Global Payments and the related notes included in Global Payments’ Annual Report on Form 10-K for the year ended December 31, 2018, and the unaudited consolidated financial statements contained in Global Payments’ Quarterly Report on Form 10-Q for the period ended March 31, 2019 and (ii) the historical audited consolidated financial statements of TSYS and the related notes included in TSYS’ Annual Report on Form 10-K for the year ended December 31, 2018, and the unaudited consolidated financial statements contained in TSYS’ Quarterly Report on Form 10-Q for the period ended March 31, 2019, each of which is incorporated by reference herein.



 

31


Table of Contents
     As of and for the
Three Months Ended
March 31, 2019
     As of and for the
Year Ended
December 31, 2018
 

Global Payments’ Historical Per Share Data

     

Earnings per share—basic

   $ 0.71      $ 2.85  

Earnings per share—diluted

   $ 0.71      $ 2.84  

Cash dividends declared per common share

   $ 0.01      $ 0.04  

Book value per share

   $ 25.33      $ 25.27  

 

     As of and for the
Three Months Ended
March 31, 2019
     As of and for the
Year Ended
December 31, 2018
 

TSYS’ Historical Per Share Data

     

Earnings per share—basic

   $ 0.91      $ 3.17  

Earnings per share—diluted

   $ 0.90      $ 3.14  

Cash dividends declared per common share

   $ 0.13      $ 0.52  

Book value per share

   $ 13.30      $ 14.32  

 

     As of and for the
Three Months Ended
March 31, 2019
     As of and for the
Year Ended
December 31, 2018
 

Unaudited Pro Forma Combined Per Share Data

     

Earnings per share—basic

   $ 0.63      $ 2.20  

Earnings per share—diluted

   $ 0.63      $ 2.20  

Cash dividends declared per common share(1)

     n/a        n/a  

Book value per share

   $ 88.31        n/a  

 

     As of and for the
Three Months Ended
March 31, 2019
     As of and for the
Year Ended
December 31, 2018
 

Unaudited Pro Forma Combined Equivalent Per Share Data for TSYS(2)

     

Earnings per share—basic

   $ 0.51      $ 1.78  

Earnings per share—diluted

   $ 0.51      $ 1.78  

Cash dividends declared per common share(1)

     n/a        n/a  

Book value per share

   $ 71.54        n/a  

 

 

(1)

Pro forma combined cash dividends per common share is not presented as the dividend policy for the combined company will be determined by the Global Payments board of directors following the completion of the merger.

 

(2)

The unaudited pro forma combined equivalent per share data for TSYS were calculated by multiplying the preliminary unaudited pro forma combined per share data by the exchange ratio of 0.8101.



 

32


Table of Contents

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

Some of the statements contained or incorporated by reference into this joint proxy statement/prospectus which are not statements of historical fact constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements, which are based on current expectations, estimates and projections about the industry and markets in which TSYS and Global Payments operate and beliefs of and assumptions made by TSYS management and Global Payments management, involve uncertainties that could significantly affect the financial condition, results of operations, business plans and the future performance of TSYS, Global Payments or the combined company.

Words such as “believes,” “anticipates,” “expects,” “targeted,” “estimates,” “forecasts,” “projects,” “plans,” “may,” “could,” “should,” “would,” and similar expressions are intended to identify forward-looking statements but are not the exclusive means of identifying these statements. Such forward-looking statements include, but are not limited to, statements about the strategic rationale and financial benefits of the transaction, including expected future financial and operating results and the combined company’s plans, objectives, expectations and intentions. All statements that address operating performance, events or developments that we expect or anticipate will occur in the future—including statements relating to projections of revenue, income or loss, earnings or loss per share, the payment or nonpayment of dividends, capital structure and other financial items; statements of plans and objectives of TSYS or Global Payments or their management or board of directors, including those relating to products or services; and statements of future economic performance — are forward-looking statements. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions that are difficult to predict. Although we believe the expectations reflected in any forward-looking statements are based on reasonable assumptions, we can give no assurance that our expectations will be attained, and therefore actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements.

In addition to the factors relating to the merger discussed under the caption “Risk Factors” beginning on page [    ] and the factors previously disclosed in Global Payments’ and TSYS’ reports filed with the SEC, the following factors, among others, could cause actual results to differ materially from those described in the forward-looking statements or historical performance:

 

   

the occurrence of any event, change or other circumstances that could give rise to the right of one or both of TSYS and Global Payments to terminate the merger agreement;

 

   

the outcome of any legal proceedings that may be instituted against TSYS, Global Payments or their respective directors;

 

   

the ability to obtain regulatory approvals and meet other closing conditions to the merger on a timely basis or at all, including the risk that regulatory approvals required for the merger are not obtained on a timely basis or at all, or are obtained subject to conditions that are not anticipated or that could adversely affect the combined company or the expected benefits of the transaction;

 

   

the ability to obtain approval by TSYS shareholders and Global Payments shareholders on the expected terms and schedule;

 

   

difficulties and delays in integrating the TSYS and Global Payments businesses, including but not limited to with respect to implementing systems to prevent a material security breach of any internal systems or to successfully manage credit and fraud risks in business units;

 

   

failing to fully realize anticipated cost savings and other anticipated benefits of the merger when expected or at all;

 

   

business disruptions from the proposed merger that will harm TSYS’ or Global Payments’ business, including current plans and operations;

 

33


Table of Contents
   

potential adverse reactions or changes to business relationships resulting from the announcement or completion of the merger, including as it relates to TSYS’ or Global Payments’ ability to successfully renew existing client contracts on favorable terms or at all and obtain new clients;

 

   

failing to comply with the applicable requirements of Visa, Mastercard or other payment networks or card schemes or changes in those requirements;

 

   

the ability of TSYS or Global Payments to retain and hire key personnel;

 

   

the diversion of management’s attention from ongoing business operations;

 

   

uncertainty as to the long-term value of the common stock of Global Payments following the merger, including the dilution caused by Global Payments’ issuance of additional shares of its common stock in connection with the transaction;

 

   

the continued availability of capital and financing following the merger;

 

   

the business, economic and political conditions in the markets in which TSYS and Global Payments operate;

 

   

the impact of new or changes in current laws, regulations, credit card association rules or other industry standards, including privacy and cybersecurity laws and regulations; and

 

   

events beyond TSYS’ or Global Payments’ control, such as acts of terrorism.

Any forward-looking statements speak only as of the date of this joint proxy statement/prospectus or as of the date they were made, and neither TSYS nor Global Payments undertakes any obligation to update forward-looking statements. As for the forward-looking statements that relate to future financial results and other projections, actual results will be different due to the inherent uncertainties of estimates, forecasts and projections and may be better or worse than projected and such differences could be material. Given these uncertainties, you should not place any reliance on these forward-looking statements. Annualized, pro forma, projected and estimated numbers are used for illustrative purpose only, are not forecasts and may not reflect actual results.

For additional information about factors that could cause actual results to differ materially from those described in the forward-looking statements, please see the reports that Global Payments and TSYS have filed with the SEC as described under “Where You Can Find More Information” beginning on page [    ].

We expressly qualify in their entirety all forward-looking statements attributable to either of us or any person acting on our behalf by the cautionary statements contained or referred to in this joint proxy statement/prospectus.

 

34


Table of Contents

RISK FACTORS

In addition to the other information contained in or incorporated by reference into this joint proxy statement/prospectus, including the matters addressed under the caption “Cautionary Statement Regarding Forward-Looking Statements” beginning on page [    ], you should carefully consider the following risk factors in deciding whether to vote for the approval of the merger agreement.

Because the market price of Global Payments common stock may fluctuate, holders of TSYS common stock cannot be certain of the market value of the merger consideration they will receive.

In the merger, each share of TSYS common stock issued and outstanding immediately prior to the effective time (other than certain shares held by Global Payments or TSYS) will be converted into 0.8101 shares of Global Payments common stock. This exchange ratio will not be adjusted for changes in the market price of either Global Payments common stock or TSYS common stock. Changes in the price of Global Payments common stock prior to the merger will affect the value that holders of TSYS common stock will receive in the merger.    Neither Global Payments nor TSYS is permitted to terminate the merger agreement as a result, in and of itself, of any increase or decrease in the market price of Global Payments common stock or TSYS common stock.

Stock price changes may result from a variety of factors, including general market and economic conditions, changes in TSYS’ and Global Payments’ businesses, operations, results and prospects and regulatory considerations, many of which factors are beyond TSYS’ and Global Payments’ control. Therefore, at the time of the TSYS special meeting, holders of TSYS common stock will not know the market value of the consideration to be received at the effective time. Holders of TSYS common stock should obtain current market quotations for shares of Global Payments common stock and for shares of TSYS common stock.

The market price of Global Payments common stock after the merger may be affected by factors different from those affecting the shares of TSYS or Global Payments currently.

In the merger, holders of TSYS common stock will become holders of Global Payments common stock. Aspects of Global Payments’ business differ from those of TSYS. Accordingly, the results of operations of the combined company and the market price of Global Payments common stock after the completion of the merger may be affected by factors different from those currently affecting the independent results of operations of each of Global Payments and TSYS. For a discussion of the businesses of Global Payments and TSYS and of certain factors to consider in connection with those businesses, see the documents incorporated by reference in this joint proxy statement/prospectus and referred to under “Where You Can Find More Information” beginning on page [    ].

Global Payments and TSYS are expected to incur substantial costs related to the merger and integration.

Global Payments and TSYS have incurred and expect to incur a number of non-recurring costs associated with the merger. These costs include financial advisory, legal, accounting, consulting and other advisory fees, severance/employee benefit-related costs, public company filing fees and other regulatory fees, printing costs and other related costs. Some of these costs are payable by either Global Payments or TSYS regardless of whether or not the merger is completed.

The combined company is expected to incur substantial costs in connection with the related integration. There are a large number of processes, policies, procedures, operations, technologies and systems that may need to be integrated, including purchasing, accounting and finance, sales, payroll, pricing and benefits. While Global Payments and TSYS have assumed that a certain level of costs will be incurred, there are many factors beyond their control that could affect the total amount or the timing of the integration costs. Moreover, many of the costs that will be incurred are, by their nature, difficult to estimate accurately. These costs could, particularly in the

 

35


Table of Contents

near term, exceed the savings that the combined company expects to achieve from the elimination of duplicative costs and the realization of economies of scale and cost savings. These integration costs may result in the combined company taking significant charges against earnings following the completion of the merger, and the amount and timing of such charges are uncertain at present.

Combining Global Payments and TSYS may be more difficult, costly or time consuming than expected and Global Payments and TSYS may fail to realize the anticipated benefits of the merger.

The success of the merger will depend, in part, on the ability to realize the anticipated cost savings from combining the businesses of Global Payments and TSYS. To realize the anticipated benefits and cost savings from the merger, Global Payments and TSYS must successfully integrate and combine their businesses in a manner that permits those cost savings to be realized. If Global Payments and TSYS are not able to successfully achieve these objectives, the anticipated benefits of the merger may not be realized fully or at all or may take longer to realize than expected. In addition, the actual cost savings and anticipated benefits of the merger could be less than anticipated.

Global Payments and TSYS have operated and, until the completion of the merger, must continue to operate, independently. It is possible that the integration process could result in the loss of key employees, the disruption of each company’s ongoing businesses or inconsistencies in standards, controls, procedures and policies that adversely affect the companies’ ability to maintain relationships with clients, customers, commercial counterparties and employees or to achieve the anticipated benefits and cost savings of the merger. Integration efforts between the two companies may also divert management attention and resources. These integration matters could have an adverse effect on each of Global Payments and TSYS during this transition period and for an undetermined period after completion of the merger on the combined company.

The future results of the combined company following the merger may suffer if the combined company does not effectively manage its expanded operations.

Following the merger, the size of the business of the combined company will increase significantly beyond the current size of either Global Payments’ or TSYS’ business. The combined company’s future success will depend, in part, upon its ability to manage this expanded business, which will pose substantial challenges for management, including challenges related to the management and monitoring of new operations and associated increased costs and complexity. The combined company may also face increased scrutiny from governmental authorities as a result of the significant increase in the size of its business. There can be no assurances that the combined company will be successful or that it will realize the expected operating efficiencies, cost savings, revenue enhancements or other benefits currently anticipated from the merger.

The combined company may be unable to retain Global Payments and/or TSYS personnel successfully after the merger is completed.

The success of the merger will depend in part on the combined company’s ability to retain the talents and dedication of key employees currently employed by Global Payments and TSYS. It is possible that these employees may decide not to remain with Global Payments or TSYS, as applicable, while the merger is pending or with the combined company after the merger is consummated. If key employees terminate their employment, the combined company’s business activities may be adversely affected and management’s attention may be diverted from successfully integrating Global Payments and TSYS to hiring suitable replacements, all of which may cause the combined company’s business to suffer. In addition, Global Payments and TSYS may not be able to locate or retain suitable replacements for any key employees who leave either company.

 

36


Table of Contents

Regulatory approvals may not be received, may take longer than expected or may require conditions that are not presently anticipated or that could have an adverse effect on the combined company following the merger.

Before the merger may be completed, various authorizations, consents, clearances, orders and approvals must be obtained from various antitrust and regulatory authorities in the United States and in foreign jurisdictions. The governmental entities from which these approvals are required may refuse to approve the merger or impose requirements for the completion of the merger. Any conditions or requirements imposed could have the effect of delaying or preventing completion of the merger or imposing additional costs on or limiting the revenues of the combined company following the merger, any of which might have an adverse effect on the combined company following the merger.

The unaudited pro forma condensed combined financial information included in this joint proxy statement/prospectus is preliminary and the actual financial condition and results of operations of the combined company after the merger may differ materially.

The unaudited pro forma condensed combined financial information in this joint proxy statement/prospectus is presented for illustrative purposes only and is not necessarily indicative of what the combined company’s actual financial condition or results of operations would have been had the merger been completed on the dates indicated. The unaudited pro forma condensed combined financial information reflects adjustments, which are based upon preliminary estimates, to reflect the TSYS identifiable assets to be acquired and liabilities to be assumed at fair value and the resulting goodwill. The fair value estimates reflected in this joint proxy statement/prospectus are preliminary, and final amounts will be based upon the actual consideration and the fair value of the assets and liabilities of TSYS as of the acquisition date for accounting purposes. Accordingly, the final acquisition accounting adjustments may differ materially from the pro forma adjustments reflected in this joint proxy statement/prospectus. For more information, see the section entitled “Unaudited Pro Forma Condensed Combined Financial Information” beginning on page [    ].

Certain of Global Payments’ and TSYS’ directors and executive officers may have interests in the merger that may differ from the interests of holders of Global Payments common stock and holders of TSYS common stock.

Holders of Global Payments common stock and holders of TSYS common stock should be aware that some of the Global Payments and TSYS directors and executive officers may have interests in the merger and have arrangements that are different from, or in addition to, those of holders of Global Payments common stock and holders of TSYS common stock generally. These interests and arrangements may create potential conflicts of interest. The Global Payments and TSYS boards of directors were aware of these respective interests and considered these interests, among other matters, when making their decisions to approve the merger agreement, and in recommending that shareholders vote to approve the merger agreement. For a more complete description of these interests, please see the sections entitled “The Merger—Interests of Global Payments’ Directors and Executive Officers in the Merger” beginning on page [    ] and “The Merger—Interests of TSYS’ Directors and Executive Officers in the Merger” beginning on page [    ].

Termination of the merger agreement could negatively affect Global Payments or TSYS.

If the merger agreement is terminated, there may be various consequences. For example, Global Payments’ or TSYS’ businesses may have been affected adversely by the failure to pursue other beneficial opportunities due to the focus of management on the merger, without realizing any of the anticipated benefits of completing the merger. Additionally, if the merger agreement is terminated, the market price of Global Payments or TSYS common stock could decline to the extent that the current market prices reflect a market assumption that the merger will be completed. If the merger agreement is terminated under certain circumstances, either Global Payments or TSYS may be required to pay a termination fee of $860 million to the other party.

 

37


Table of Contents

Additionally, each of Global Payments and TSYS has incurred and will incur substantial costs in connection with the negotiation and completion of the transactions contemplated by the merger agreement, as well as the costs of filing, printing and mailing this joint proxy statement/prospectus, and all filing and other fees paid to the SEC in connection with the merger. If the merger is not completed, Global Payments and TSYS would have to recognize these as expense without realizing the expected benefits of the merger.

Global Payments and TSYS will be subject to business uncertainties and contractual restrictions while the merger is pending.

Uncertainty about the effect of the merger on employees and customers may have an adverse effect on Global Payments or TSYS. These uncertainties may impair Global Payments’ or TSYS’ ability to attract, retain and motivate key personnel until the merger is completed, and could cause customers and others that deal with Global Payments or TSYS to seek to change existing business relationships with Global Payments or TSYS. In addition, subject to certain exceptions, Global Payments and TSYS have agreed to operate their respective businesses in the ordinary course prior to closing, which could cause Global Payments or TSYS to be unable to pursue other beneficial opportunities. See the section entitled “The Merger Agreement—Covenants and Agreements” beginning on page [    ] for a description of the restrictive covenants applicable to Global Payments and TSYS.

The shares of Global Payments common stock to be received by holders of TSYS common stock as a result of the merger will have different rights from the shares of TSYS common stock.

In the merger, holders of TSYS common stock will become holders of Global Payments common stock and their rights as shareholders will be governed by the governing documents of the combined company. The rights associated with Global Payments common stock are different from the rights associated with TSYS common stock. See the section entitled “Comparison of Shareholders’ Rights” beginning on page [    ] for a discussion of the different rights associated with Global Payments common stock.

Global Payments will incur indebtedness in connection with the merger, which could adversely affect Global Payments, including by decreasing its business flexibility.

In connection with the consummation of the merger, Global Payments intends to refinance its existing indebtedness and to assume and refinance certain indebtedness of TSYS. Global Payments may obtain financing commitments of up to $3.0 billion with respect to a term loan facility and $3.0 billion with respect to a revolving facility that can be used (a) to refinance certain outstanding indebtedness of Global Payments and TSYS in connection with the merger, (b) to pay any cash payments in lieu of fractional shares payable in accordance with the terms of the merger agreement, (c) to pay the related transaction fees and expenses and (d) in certain cases, for general corporate purposes, subject in each case to the customary conditions set forth in the debt commitment letters. These conditions may not be satisfied, and the commitments either may not be funded when required or may be funded at an increased cost to Global Payments. Global Payments may also issue senior notes in connection with the merger. Global Payments’ increased level of debt and the covenants to which Global Payments will agree in connection with the debt financing could have negative consequences on Global Payments, including, among other things, (1) requiring Global Payments to dedicate a larger portion of its cash flow from operations to servicing and repayment of the debt, (2) reducing funds available for strategic initiatives and opportunities, working capital and other general corporate needs and (3) limiting Global Payments’ ability to incur certain kinds or amounts of additional indebtedness, which could restrict its flexibility to react to changes in its business, its industry and economic conditions.

Holders of Global Payments and TSYS common stock will have a reduced ownership percentage and voting interest in the combined company after the merger and may exercise less influence over management.

Holders of Global Payments and TSYS common stock currently have the right to vote in the election of the board of directors and on other matters affecting Global Payments and TSYS, respectively. In the merger, each holder

 

38


Table of Contents

of TSYS common stock who receives shares of Global Payments common stock will become a holder of common stock of the combined company, with a percentage ownership of the combined company that is smaller than the holder’s percentage ownership of TSYS. Following the completion of the merger, the former holders of TSYS common stock are estimated to own approximately forty-eight percent (48%) of the fully diluted shares of the combined company immediately after the merger and current holders of Global Payments common stock as a group are estimated to own approximately fifty-two percent (52%) of the fully diluted shares of the combined company immediately after the merger. Because of this, holders of TSYS common stock may have less influence on the management and policies of the combined company than they now have on the management and policies of TSYS, and holders of Global Payments common stock may have less influence on the management and policies of the combined company than they now have on the management and policies of Global Payments.

Issuance of shares of Global Payments common stock in connection with the merger may adversely affect the market price of Global Payments common stock.

In connection with the payment of the merger consideration, Global Payments expects to issue approximately 143.4 million shares of common stock to TSYS shareholders. The issuance of these new shares of Global Payments common stock may result in fluctuations in the market price of Global Payments common stock, including a stock price decrease.

Holders of Global Payments common stock and holders of TSYS common stock will not have appraisal rights or dissenters’ rights in the merger.

Appraisal rights (also known as dissenters’ rights) are statutory rights that, if applicable under law, enable shareholders to dissent from an extraordinary transaction, such as a merger, and to demand that the corporation pay the fair value for their shares as determined by a court in a judicial proceeding instead of receiving the consideration offered to shareholders in connection with the extraordinary transaction.

Under Article 13 of the GBCC, the holders of Global Payments common stock will not be entitled to appraisal or dissenters’ rights in connection with the merger with respect to shares of any class or series that remain outstanding after consummation of the merger. If the merger is completed, holders of Global Payments common stock will not receive any consideration, and their shares of Global Payments common stock will remain outstanding and will constitute shares of the combined company. Accordingly, holders of Global Payments common stock are not entitled to any appraisal or dissenters’ rights in connection with the merger.

Under Article 13 of the GBCC, the holders of TSYS common stock will not be entitled to appraisal or dissenters’ rights in connection with the merger if, on the record date for the TSYS special meeting, TSYS’ shares are listed on a national securities exchange or held of record by more than two thousand (2,000) shareholders, and holders of TSYS common stock accept as consideration for their shares the shares of the combined company or another publicly held corporation which at the effective date of the merger are either listed on a national securities exchange or held of record by more than two thousand (2,000) shareholders, except for cash paid in lieu of fractional shares. TSYS common stock is currently listed on the NYSE, a national securities exchange, and is expected to continue to be so listed on the record date for the TSYS special meeting. In addition, the holders of TSYS common stock will receive shares of Global Payments common stock as consideration in the merger, which shares are currently listed on the NYSE, and are expected to continue to be so listed at the effective time. Accordingly, the holders of TSYS common stock are not entitled to any appraisal or dissenters’ rights in connection with the merger.

Shareholder litigation could prevent or delay the closing of the merger or otherwise negatively affect the business and operations of Global Payments and TSYS.

Global Payments and TSYS may incur costs in connection with the defense or settlement of any shareholder lawsuits filed in connection with the merger. Such litigation could have an adverse effect on the financial

 

39


Table of Contents

condition, results of operations and cash flows of Global Payments and TSYS and could prevent or delay the consummation of the merger.

The merger agreement limits Global Payments’ and TSYS’ respective ability to pursue alternatives to the merger and may discourage other companies from trying to acquire Global Payments or TSYS.

The merger agreement contains “no shop” covenants that restrict each of Global Payments’ and TSYS’ ability to, directly or indirectly, initiate, solicit, knowingly encourage or knowingly facilitate any inquiries or proposals with respect to any acquisition proposal, engage or participate in any negotiations with any person concerning any acquisition proposal, provide any confidential or nonpublic information or data to, or have or participate in any discussions with, any person relating to any acquisition proposal, subject to certain exceptions, or, unless the merger agreement has been terminated in accordance with its terms, approve or enter into any term sheet, letter of intent, commitment, memorandum of understanding, agreement in principle, acquisition agreement, merger agreement or other agreement in connection with or relating to any acquisition proposal.

The merger agreement further provides that, during the 12-month period following the termination of the merger agreement under specified circumstances, including the entry into a definitive agreement or consummation of a transaction with respect to an alternative acquisition proposal, Global Payments or TSYS may be required to pay to the other party a cash termination fee equal to $860 million. See the section entitled “The Merger Agreement—Termination Fee” beginning on page [    ].

These provisions could discourage a potential third-party acquirer that might have an interest in acquiring all or a significant portion of Global Payments or TSYS from considering or proposing that acquisition.

The merger agreement subjects Global Payments and TSYS to restrictions on their respective business activities prior to the effective time.

The merger agreement subjects Global Payments and TSYS to restrictions on their respective business activities prior to the effective time. The merger agreement obligates each of Global Payments and TSYS to, and to cause each of its subsidiaries to, subject to specified exceptions, conduct its business in the ordinary course in all material respects and use reasonable best efforts to maintain and preserve intact its business organization, employees and advantageous business relationships. These restrictions could prevent Global Payments and TSYS from pursuing certain business opportunities that arise prior to the effective time and are outside the ordinary course of business. See the section entitled “The Merger Agreement—Covenants and Agreements—Conduct of Business Prior to the Completion of the Merger” beginning on page [    ] for more information.

Risks Relating to Global Payments’ Business

You should read and consider risk factors specific to Global Payments’ business that will also affect the combined company after the merger. These risks are described in the sections entitled “Risk Factors” in Global Payments’ Annual Report on Form 10-K for the year ended December 31, 2018 and in other documents incorporated by reference into this joint proxy statement/prospectus. Please see the section entitled “Where You Can Find More Information” beginning on page [    ] for the location of information incorporated by reference into this joint proxy statement/prospectus.

Risks Relating to TSYS’ Business

You should read and consider risk factors specific to TSYS’ business that will also affect the combined company after the merger. These risks are described in the sections entitled “Risk Factors” in TSYS’ Annual Report on Form 10-K for the year ended December 31, 2018 and in other documents incorporated by reference into this joint proxy statement/prospectus. Please see the section entitled “Where You Can Find More Information” beginning on page [    ] for the location of information incorporated by reference into this joint proxy statement/prospectus.

 

40


Table of Contents

THE GLOBAL PAYMENTS SPECIAL MEETING

This section contains information for holders of Global Payments common stock about the special meeting that Global Payments has called to allow holders of Global Payments common stock to consider and vote on the merger agreement and other related matters. This joint proxy statement/prospectus is accompanied by a notice of the special meeting of holders of Global Payments common stock and a form of proxy card that the Global Payments board of directors is soliciting for use at the special meeting and at any adjournments or postponements of the special meeting.

Date, Time and Place of the Meeting

The Global Payments special meeting will be held on [                    ], 2019 at [                    ], at [                    ] local time.

Matters to Be Considered

At the Global Payments special meeting, holders of Global Payments common stock will be asked to consider and vote upon the following proposals:

 

   

the Global Payments merger proposal;

 

   

the Global Payments authorized share count proposal;

 

   

the Global Payments declassification proposal; and

 

   

the Global Payments adjournment proposal.

Recommendation of Global Payments’ Board of Directors

The Global Payments board of directors unanimously recommends that you vote “FOR” the Global Payments merger proposal, “FOR” the Global Payments authorized share count proposal, “FOR” the Global Payments declassification proposal and “FOR” the Global Payments adjournment proposal. See the section entitled “The Merger—Global Payments’ Reasons for the Merger; Recommendation of Global Payments’ Board of Directors” beginning on page [    ] for a more detailed discussion of the Global Payments board of directors’ recommendation.

Record Date and Quorum

The Global Payments board of directors has fixed the close of business on [                ], 2019 as the record date for determination of holders of Global Payments common stock entitled to notice of and to vote at the Global Payments special meeting. On the record date for the Global Payments special meeting, there were [            ] shares of Global Payments common stock outstanding.

Holders of a majority of the shares of Global Payments common stock entitled to vote at the special meeting must be present, either in person or by proxy, to constitute a quorum at the Global Payments special meeting. If you fail to submit a proxy or to vote in person at the Global Payments special meeting, your shares of Global Payments common stock will not be counted towards a quorum. Abstentions are considered present for purposes of establishing a quorum.

At the Global Payments special meeting, each share of Global Payments common stock is entitled to one (1) vote on all matters properly submitted to holders of Global Payments common stock.

As of the record date, Global Payments’ directors and executive officers and their affiliates owned and were entitled to vote approximately [            ] shares of Global Payments common stock, representing approximately

 

41


Table of Contents

[    ]% of the outstanding shares of Global Payments common stock. We currently expect that Global Payments’ directors and executive officers will vote their shares in favor of the merger agreement and the other proposals to be considered at the Global Payments special meeting, although none of them has entered into any agreements obligating them to do so.

Broker Non-Votes

A broker non-vote occurs when a bank, broker or other nominee is not permitted to vote on a “non-routine” matter without instructions from the beneficial owner of the shares and the beneficial owner fails to provide the bank, broker or other nominee with such instructions. Broker non-votes only count toward a quorum if at least one proposal is presented with respect to which the bank, broker or other nominee has discretionary authority. It is expected that all proposals to be voted on at the Global Payments special meeting will be “non-routine” matters, and, as such, broker non-votes, if any, will not be counted as present and entitled to vote for purposes of determining a quorum at the Global Payments special meeting. If your bank, broker or other nominee holds your shares of Global Payments common stock in “street name,” such entity will vote your shares of Global Payments common stock only if you provide instructions on how to vote by complying with the voter instruction form sent to you by your bank, broker or other nominee with this joint proxy statement/prospectus.

Vote Required; Treatment of Abstentions, Broker Non-Votes and Failure to Vote

Global Payments merger proposal:

 

   

Vote required: Approval of the Global Payments merger proposal requires the affirmative vote of a majority of all the votes entitled to be cast on the merger agreement by the holders of Global Payments common stock.

 

   

Effect of abstentions and broker non-votes: If you mark “ABSTAIN” on your proxy, fail to submit a proxy or vote in person at the Global Payments special meeting or fail to instruct your bank, broker or other nominee how to vote with respect to the Global Payments merger proposal, it will have the same effect as a vote “AGAINST” the Global Payments merger proposal.

Global Payments authorized share count proposal:

 

   

Vote required: Approval of the Global Payments authorized share count proposal requires the affirmative vote of a majority of all the votes entitled to be cast on the Global Payments authorized share count proposal by the holders of Global Payments common stock.

 

   

Effect of abstentions and broker non-votes: If you mark “ABSTAIN” on your proxy, fail to submit a proxy or vote in person at the Global Payments special meeting or fail to instruct your bank, broker or other nominee how to vote with respect to the Global Payments authorized share count proposal, it will have the same effect as a vote “AGAINST” the Global Payments authorized share count proposal.

Global Payments declassification proposal:

 

   

Vote required: Approval of the Global Payments declassification proposal requires the affirmative vote of the holders of two-thirds (2/3) of the outstanding shares of Global Payments common stock entitled to vote on the proposal.

 

   

Effect of abstentions and broker non-votes: If you mark “ABSTAIN” on your proxy, fail to submit a proxy or vote in person at the Global Payments special meeting or fail to instruct your bank, broker or other nominee how to vote with respect to the Global Payments declassification proposal, it will have the same effect as a vote “AGAINST” the Global Payments declassification proposal.

Global Payments adjournment proposal:

 

   

Vote required: Approval of the Global Payments adjournment proposal requires the affirmative vote of the holders of at least a majority of the shares of Global Payments common stock represented at the Global Payments special meeting, whether or not a quorum is present.

 

42


Table of Contents
   

Effect of abstentions and broker non-votes: If you mark “ABSTAIN” on your proxy with respect to the Global Payments adjournment proposal, it will have the same effect as a vote “AGAINST” the Global Payments adjournment proposal. If you fail to submit a proxy or vote in person at the Global Payments special meeting or fail to instruct your bank or broker how to vote with respect to the Global Payments adjournment proposal, your shares will not be deemed to be represented at the Global Payments special meeting with respect to the Global Payments adjournment proposal and it will have no effect on the Global Payments adjournment proposal.

Attending the Special Meeting

Your proxy card is your admission ticket. When you arrive at the Global Payments special meeting, you will be asked to present photo identification, such as a driver’s license. If you are a beneficial owner of Global Payments common stock held by a broker, bank or other nominee, you will need proof of ownership to be admitted to the meeting. A recent brokerage statement or a letter from a bank or broker are examples of proof of ownership. If you want to vote your Global Payments common stock held in nominee name in person, you must get a “legal proxy” in your name from the broker, bank or other nominee that holds your shares.

Proxies

A holder of Global Payments common stock may vote by proxy or in person at the Global Payments special meeting. If you hold your shares of Global Payments common stock in your name as a holder of record, to submit a proxy, you, as a holder of Global Payments common stock, may use one of the following methods:

 

   

By telephone: by calling the toll-free number indicated on the accompanying proxy card and following the recorded instructions.

 

   

Through the Internet: by visiting the website indicated on the accompanying proxy card and following the instructions.

 

   

By completing and returning the accompanying proxy card in the enclosed postage-paid envelope. The envelope requires no additional postage if mailed in the United States.

Global Payments requests that holders of Global Payments common stock vote by telephone, over the Internet or by completing and signing the accompanying proxy card and returning it to Global Payments as soon as possible in the enclosed postage-paid envelope. When the accompanying proxy card is returned properly executed, the shares of Global Payments common stock represented by it will be voted at the Global Payments special meeting in accordance with the instructions contained on the proxy card.

If a holder’s shares are held in “street name” by a broker, bank or other nominee, the holder should check the voting form used by that firm to determine whether the holder may vote by telephone or the Internet.

Every vote is important. Accordingly, you should sign, date and return the enclosed proxy card, or vote via the Internet or by telephone, whether or not you plan to attend the Global Payments special meeting in person. Sending in your proxy card or voting by telephone or on the Internet will not prevent you from voting your shares personally at the meeting because you may revoke your proxy at any time before it is voted.

Shares Held in Street Name

If your shares are held in “street name” through a broker, bank or other nominee, you must instruct the broker, bank or other nominee on how to vote your shares.

You may not vote shares held in street name by returning a proxy card directly to Global Payments or by voting in person at the Global Payments special meeting unless you provide a “legal proxy” giving you the right to vote the shares, which you must obtain from your broker, bank or other nominee. If you choose to vote your shares in person at the Global Payments special meeting, please bring proof of identification.

 

43


Table of Contents

Further, brokers, banks or other nominees who hold shares of Global Payments common stock on behalf of their customers may not give a proxy to Global Payments to vote those shares with respect to any non-routine matters without specific instructions from you, as brokers, banks and other nominees do not have discretionary voting power on any non-routine proposals that will be voted upon at the Global Payments special meeting, including the Global Payments merger proposal, the Global Payments authorized share count proposal, the Global Payments declassification proposal and the Global Payments adjournment proposal.

Revocability of Proxies

If you are a holder of Global Payments common stock of record, you may revoke your proxy at any time before it is voted by:

 

   

submitting a written notice of revocation to Global Payments’ corporate secretary;

 

   

granting a subsequently dated proxy;

 

   

voting by telephone or the Internet at a later time; or

 

   

attending in person and voting at the Global Payments special meeting.

If you hold your shares of Global Payments common stock through a broker, bank or other nominee, you should contact your broker, bank or other nominee to change your vote.

Attendance at the Global Payments special meeting will not in and of itself constitute revocation of a proxy. A revocation or later-dated proxy received by Global Payments after the vote will not affect the vote. Global Payments’ corporate secretary’s mailing address is: Corporate Secretary, Global Payments Inc., 3550 Lenox Road, Atlanta, Georgia 30326. If the Global Payments special meeting is postponed or adjourned, it will not affect the ability of holders of Global Payments common stock of record as of the record date to exercise their voting rights or to revoke any previously-granted proxy using the methods described above.

Delivery of Proxy Materials

As permitted by applicable law, only one (1) copy of this joint proxy statement/prospectus is being delivered to holders of Global Payments common stock residing at the same address, unless such holders of Global Payments common stock have notified Global Payments of their desire to receive multiple copies of the joint proxy statement/prospectus.

If you hold shares of both Global Payments common stock and TSYS common stock, you will receive two (2) separate packages of proxy materials.

Global Payments will promptly deliver, upon oral or written request, a separate copy of the joint proxy statement/prospectus to any holder of Global Payments common stock residing at an address to which only one (1) copy of such document was mailed. Requests for additional copies should be directed to Investor Relations at (770) 829-8478 or Global Payments’ proxy solicitor, Innisfree M&A Incorporated, at the following address or phone number: [            ].

Solicitation of Proxies

Global Payments and TSYS will share equally the expenses incurred in connection with the printing and mailing of this joint proxy statement/prospectus. To assist in the solicitation of proxies, Global Payments has retained Innisfree M&A Incorporated, for a fee of $[            ] plus reimbursement of out-of-pocket expenses for their services. Global Payments and its proxy solicitor may also request banks, brokers and other intermediaries holding shares of Global Payments common stock beneficially owned by others to send this joint proxy statement/prospectus to, and obtain proxies from, the beneficial owners and may reimburse such record holders for their reasonable out-of-pocket expenses in so doing. Solicitation of proxies by mail may be supplemented by telephone and other electronic means, advertisements and personal solicitation by the directors, officers or employees of Global Payments. No additional compensation will be paid to our directors, officers or employees for solicitation.

 

44


Table of Contents

Other Matters to Come Before the Global Payments Special Meeting

Global Payments management knows of no other business to be presented at the Global Payments special meeting, but if any other matters are properly presented to the meeting or any adjournments thereof, the persons named in the proxies will vote upon them in accordance with the board of directors’ recommendations.

Assistance

If you need assistance in completing your proxy card, have questions regarding Global Payments’ special meeting or would like additional copies of this joint proxy statement/prospectus, please contact Investor Relations at (770) 829-8478 or Global Payments’ proxy solicitor, Innisfree M&A Incorporated, at the following address or phone number: [            ].

 

45


Table of Contents

GLOBAL PAYMENTS PROPOSALS

Proposal 1: Global Payments Merger Proposal

Global Payments is asking holders of Global Payments common stock to approve the merger agreement and the transactions contemplated thereby, including the merger and the issuance of Global Payments common stock pursuant to the merger agreement. Holders of Global Payments common stock should read this joint proxy statement/prospectus carefully and in its entirety, including the annexes, for more detailed information concerning the merger agreement and the merger. A copy of the merger agreement is attached to this joint proxy statement/prospectus as Annex A.

After careful consideration, the Global Payments board of directors, by a unanimous vote of all directors, determined that the merger, the merger agreement and the transactions contemplated by the merger agreement are advisable and in the best interests of Global Payments and its shareholders and unanimously adopted and approved the merger agreement, the merger and the other transactions contemplated by the merger agreement. See the section entitled “The Merger—Global Payments’ Reasons for the Merger; Recommendation of Global Payments’ Board of Directors” beginning on page [    ] for a more detailed discussion of the Global Payments board of directors’ recommendation.

The Global Payments board of directors unanimously recommends a vote “FOR” the Global Payments merger proposal.

Proposal 2: Global Payments Authorized Share Count Proposal

In connection with the merger, Global Payments is asking its shareholders to approve an amendment to Global Payments’ articles of incorporation to increase the number of authorized shares of Global Payments common stock from two hundred million (200,000,000) to four hundred million (400,000,000), effective immediately prior to, and subject to, the completion of the merger. A copy of the Global Payments authorized share count articles amendment is attached to this joint proxy statement/prospectus as Annex F. Holders of Global Payments common stock should read the Global Payments authorized share count articles amendment in its entirety.

As of the close of business on the record date for the Global Payments special meeting, there were [            ] outstanding shares of Global Payments common stock, [            ] shares of Global Payments common stock held in treasury and [            ] shares of Global Payments common stock reversed for issuance to directors and employees under various compensation and benefits plans, with the remaining [            ] shares being authorized, unissued and unreserved shares available for other corporate purposes. In connection with the merger, Global Payments expects to issue approximately 143.4 million shares of common stock to common shareholders of TSYS.

Without the Global Payments authorized share count articles amendment, Global Payments will not have a sufficient number of authorized shares to complete the merger. Based on current estimates, after giving effect to the Global Payments authorized share count articles amendment, Global Payments will have approximately [            ] authorized but unissued shares of Global Payments common stock available for issuance after completion of the merger. The Global Payments board of directors considers the proposed increase in the number of authorized shares desirable because it will enable Global Payments to complete the merger and it will provide greater flexibility in the capital structure of the combined company following the merger by allowing it to raise capital that may be necessary to further develop its business, to fund potential acquisitions, to have shares available for use in connection with stock plans and to pursue other corporate purposes that may be identified by the board of directors of the combined company in the future.

Each share of Global Payments common stock authorized for issuance has the same rights as, and is identical in all respects with, each other share of Global Payments common stock. The newly authorized shares of Global

 

46


Table of Contents

Payments common stock will not affect the rights, such as voting and liquidation rights, of the shares of Global Payments common stock currently outstanding. Under the Global Payments articles of incorporation, shareholders of Global Payments do not have preemptive rights. Therefore, should the Global Payments board of directors elect to issue additional shares of Global Payments common stock, other than on a pro rata basis to all current common shareholders, existing common shareholders of Global Payments would not have any preferential rights to purchase those shares, and such issuance could have a dilutive effect on earnings per share, book value per share, and the voting power and shareholdings of current shareholders of Global Payments, depending on the particular circumstances in which the additional shares of Global Payments common stock are issued. Please see the section entitled “Description of Global Payments Capital Stock” beginning on page [    ] for a description of Global Payments capital stock and the rights of shareholders of Global Payments. The Global Payments board of directors continually considers Global Payments’ capital structure and will determine the terms and timing of any future issuance.

The Global Payments authorized share count articles amendment will become effective immediately prior to the effective time, subject to the completion of the merger.

The foregoing description of the Global Payments authorized share count articles amendment does not purport to be complete and is qualified in its entirety by reference to the full text of the Global Payments authorized share count articles amendment, which is attached as Annex F to this joint proxy statement/prospectus.

The Global Payments board of directors unanimously recommends a vote “FOR” the Global Payments authorized share count proposal.

Proposal 3: Global Payments Declassification Proposal

In connection with the merger, Global Payments is asking its shareholders to approve an amendment to Global Payments’ articles of incorporation to declassify the Global Payments board of directors and provide for annual elections of directors, effective only upon the completion of the merger and effective as of the effective time. If Global Payments shareholders approve the Global Payments declassification proposal and the merger is completed, the bylaws of Global Payments will be amended to reflect conforming changes. A copy of the Global Payments declassification articles amendment is attached to this joint proxy statement/prospectus as Annex G. Holders of Global Payments common stock should read the Global Payments declassification articles amendment in its entirety.

Under the Global Payments declassification articles amendment, each director elected at each annual meeting, including the 2020 annual meeting and thereafter, would be elected for a one-year term, including any director appointed to a newly created directorship or to fill a vacancy. Consequently, if shareholders of Global Payments approve the Global Payments declassification articles amendment and the merger is completed, the entire board of directors will be subject to election at next year’s annual shareholders meeting. If shareholders of Global Payments do not approve the Global Payments declassification articles amendment or if the merger is not completed, the Global Payments board of directors will remain classified and directors of Global Payments will continue to serve three-year terms.

In the event that the Global Payments declassification articles amendment is not adopted as of the effective time, Global Payments and TSYS will cooperate reasonably and in good faith in an effort to apportion the continuing Global Payments directors, on the one hand, and the continuing TSYS directors, on the other hand, as nearly evenly as is practicably possible among the different classes of the board of directors of the combined company as of the effective time so that as nearly equal a number of the continuing Global Payments directors, on the one hand, and the continuing TSYS directors, on the other hand, as is practicably possible stand for election at the first annual meeting of shareholders of the combined company following the effective time.

Classified boards may foster continuity and stability, not only on the board but also in the overall business of a company, since a majority of directors will always have prior experience as directors of the company. However,

 

47


Table of Contents

classified boards may also be considered to reduce the accountability of directors to shareholders in certain circumstances as they are likely to increase the time required for shareholders to change the composition of the board of directors and may limit the ability of shareholders to evaluate and elect each director each year. Moreover, many institutional investors believe that the election of directors is the primary means for shareholders to influence corporate governance policies and to hold management accountable for implementing those policies and that it is a better corporate governance practice to have an unclassified board.

In deciding to recommend approval of the Global Payments declassification proposal, the Global Payments board of directors considered the arguments in favor of and against continuation of a classified board of directors structure, as well as the fact that TSYS does not currently have a classified board of directors structure, and determined that it is in the combined company’s best interests to amend the articles of incorporation of Global Payments to eliminate the classified board of directors.

The foregoing description of the Global Payments declassification articles amendment does not purport to be complete and is qualified in its entirety by reference to the full text of the Global Payments declassification articles amendment, which is attached as Annex G to this joint proxy statement/prospectus.

The Global Payments board of directors unanimously recommends a vote “FOR” the Global Payments declassification proposal.

Proposal 4: Global Payments Adjournment Proposal

The Global Payments special meeting may be adjourned to another time or place, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the Global Payments special meeting to approve the Global Payments merger proposal, the Global Payments authorized share count proposal or the Global Payments declassification proposal.

If, at the Global Payments special meeting, the number of shares of Global Payments common stock present or represented and voting in favor of the Global Payments merger proposal, the Global Payments authorized share count proposal or the Global Payments declassification proposal is insufficient to approve the Global Payments merger proposal, the Global Payments authorized share count proposal or the Global Payments declassification proposal, as applicable, Global Payments intends to move to adjourn the Global Payments special meeting to enable the Global Payments board of directors to solicit additional proxies for approval of the Global Payments merger proposal, the Global Payments authorized share count proposal or the Global Payments declassification proposal, as applicable. In that event, Global Payments will ask holders of Global Payments common stock to vote upon the Global Payments adjournment proposal, but not the Global Payments merger proposal, the Global Payments authorized share count proposal or the Global Payments declassification proposal.

In this proposal, Global Payments is asking holders of Global Payments common stock to authorize the holder of any proxy solicited by the Global Payments board of directors on a discretionary basis to vote in favor of adjourning the Global Payments special meeting to another time and place for the purpose of soliciting additional proxies, including the solicitation of proxies from holders of Global Payments common stock who have previously voted.

The Global Payments board of directors unanimously recommends a vote “FOR” the Global Payments adjournment proposal.

 

48


Table of Contents

THE TSYS SPECIAL MEETING

This section contains information for holders of TSYS common stock about the special meeting that TSYS has called to allow holders of TSYS common stock to consider and vote on the merger agreement and other related matters. This joint proxy statement/prospectus is accompanied by a notice of the special meeting of holders of TSYS common stock and a form of proxy card that the TSYS board of directors is soliciting for use at the special meeting and at any adjournments or postponements of the special meeting.

Date, Time and Place of the Meeting

The TSYS special meeting will be held on [                ], 2019 at [                    ], at [                     ] local time.

Matters to be Considered

At the TSYS special meeting, holders of TSYS common stock will be asked to consider and vote upon the following proposals:

 

   

the TSYS merger proposal;

 

   

the TSYS compensation proposal;

 

   

the TSYS declassification proposal; and

 

   

the TSYS adjournment proposal.

Recommendation of TSYS’ Board of Directors

The TSYS board of directors unanimously recommends that you vote “FOR” the TSYS merger proposal, “FOR” the TSYS compensation proposal, “FOR” the TSYS declassification proposal and “FOR” the TSYS adjournment proposal. See the section entitled “The Merger—TSYS’ Reasons for the Merger; Recommendation of TSYS’ Board of Directors” beginning on page [    ] for a more detailed discussion of TSYS’ board of directors’ recommendation.

Record Date and Quorum

The TSYS board of directors has fixed the close of business on [                    ], 2019 as the record date for determination of holders of TSYS stock entitled to notice of and to vote at the TSYS special meeting. On the record date for the TSYS special meeting, there were [            ] shares of TSYS common stock outstanding.

Holders of a majority of the shares of TSYS common stock outstanding on the record date must be present, either in person or by proxy, to constitute a quorum at the TSYS special meeting. If you fail to submit a proxy or to vote in person at the TSYS special meeting, your shares of TSYS common stock will not be counted towards a quorum. Abstentions are considered present for purposes of establishing a quorum.

At the TSYS special meeting, each share of TSYS common stock is entitled to one (1) vote on all matters properly submitted to holders of TSYS common stock.

As of the record date, TSYS’ directors and executive officers and their affiliates owned and were entitled to vote approximately [            ] shares of TSYS common stock, representing [    ]% of the outstanding shares of TSYS common stock. We currently expect that TSYS’ directors and executive officers will vote their shares in favor of the merger, although none of them has entered into any agreements obligating them to do so.

Broker Non-Votes

A broker non-vote occurs when a bank, broker or other nominee is not permitted to vote on a “non-routine” matter without instructions from the beneficial owner of the shares and the beneficial owner fails to provide the

 

49


Table of Contents

bank, broker or other nominee with such instructions. Broker non-votes only count toward a quorum if at least one proposal is presented with respect to which the bank, broker or other nominee has discretionary authority. It is expected that all proposals to be voted on at the TSYS special meeting will be “non-routine” matters, and, as such, broker non-votes, if any, will not be counted as present and entitled to vote for purposes of determining a quorum at the TSYS special meeting. If your bank, broker or other nominee holds your shares of TSYS common stock in “street name,” such entity will vote your shares of TSYS common stock only if you provide instructions on how to vote by complying with the voter instruction form sent to you by your bank, broker or other nominee with this joint proxy statement/prospectus.

Vote Required; Treatment of Abstentions, Broker Non-Votes and Failure to Vote

TSYS merger proposal:

 

   

Vote required: Approval of the TSYS merger proposal requires the affirmative vote of a majority of all the votes entitled to be cast on the merger agreement by the holders of TSYS common stock.

 

   

Effect of abstentions and broker non-votes: If you mark “ABSTAIN” on your proxy, fail to submit a proxy or vote in person at the TSYS special meeting or fail to instruct your bank, broker or other nominee how to vote with respect to the TSYS merger proposal, it will have the same effect as a vote “AGAINST” the TSYS merger proposal.

TSYS compensation proposal:

 

   

Vote required: Approval of the TSYS compensation proposal requires the affirmative vote of the holders of at least a majority of the votes cast at the TSYS special meeting. For these purposes (and for purposes of the TSYS declassification proposal described below), a majority of the votes cast means that the votes cast in favor of the matter exceed the votes cast against the matter.

 

   

Effect of abstentions and broker non-votes: If you mark “ABSTAIN” on your proxy, fail to submit a proxy or vote in person at the TSYS special meeting or fail to instruct your bank, broker or other nominee how to vote with respect to the TSYS compensation proposal, you will not be deemed to have cast a vote with respect to the TSYS compensation proposal and it will have no effect on the TSYS compensation proposal.

TSYS declassification proposal:

 

   

Vote required: Approval of the TSYS declassification proposal requires the affirmative vote of the holders of at least a majority of the votes cast at the TSYS special meeting.

 

   

Effect of abstentions and broker non-votes: If you mark “ABSTAIN” on your proxy, fail to submit a proxy or vote in person at the TSYS special meeting or fail to instruct your bank, broker or other nominee how to vote with respect to the TSYS declassification proposal, you will not be deemed to have cast a vote with respect to the TSYS declassification proposal and it will have no effect on the TSYS declassification proposal.

TSYS adjournment proposal:

 

   

Vote required: Approval of the TSYS adjournment proposal requires the affirmative vote of holders of a majority of the TSYS common stock represented at the TSYS special meeting, whether or not a quorum is present.

 

   

Effect of abstentions and broker non-votes: If you mark “ABSTAIN” on your proxy, it will have same effect as a vote “AGAINST” the TSYS adjournment proposal. If you fail to submit a proxy or fail to instruct your bank, broker or other nominee how to vote with respect to the TSYS adjournment proposal, your shares will not be deemed to be represented at the TSYS special meeting and it will have no effect on the TSYS adjournment proposal.

 

50


Table of Contents

Attending the Special Meeting

Only shareholders may attend the TSYS special meeting. TSYS reserves the right to require proof of ownership (for example, a recent brokerage statement or a letter from a bank or broker) to be admitted to the TSYS special meeting. If you want to vote your TSYS common stock held in nominee name in person, you must get a “legal proxy” in your name from the broker, bank or other nominee that holds your shares.

Proxies

A holder of TSYS common stock may vote by proxy or in person at the TSYS special meeting. If you hold your shares of TSYS common stock in your name as a holder of record, to submit a proxy, you, as a holder of TSYS common stock, may use one of the following methods:

 

   

By telephone: by calling the toll-free number indicated on the accompanying proxy card and following the recorded instructions.

 

   

Through the Internet: by visiting the website indicated on the accompanying proxy card and following the instructions.

 

   

By completing and returning the accompanying proxy card in the enclosed postage-paid envelope. The envelope requires no additional postage if mailed in the United States.

TSYS requests that holders of TSYS common stock vote by telephone, over the Internet or by completing and signing the accompanying proxy card and returning it to TSYS as soon as possible in the enclosed postage-paid envelope. When the accompanying proxy card is returned properly executed, the shares of TSYS common stock represented by it will be voted at the TSYS special meeting in accordance with the instructions contained on the proxy card.

If a holder’s shares are held in “street name” by a broker, bank or other nominee, the holder should check the voting form used by that firm to determine whether the holder may vote by telephone or the Internet.

Every vote is important. Accordingly, you should sign, date and return the enclosed proxy card, or vote via the Internet or by telephone, whether or not you plan to attend the TSYS special meeting in person. Sending in your proxy card or voting by telephone or on the Internet will not prevent you from voting your shares personally at the meeting because you may revoke your proxy at any time before it is voted.

Shares Held in Street Name

If your shares are held in “street name” through a broker, bank or other nominee, you must instruct the broker, bank or other nominee on how to vote your shares. Your broker, bank or other nominee will vote your shares only if you provide specific instructions on how to vote by following the instructions provided to you by your broker, bank or other nominee.

You may not vote shares held in street name by returning a proxy card directly to TSYS or by voting in person at the TSYS special meeting unless you provide a “legal proxy” giving you the right to vote the shares, which you must obtain from your broker, bank or other nominee. If you choose to vote your shares in person at the TSYS special meeting, please bring proof of identification.

Further, brokers, banks or other nominees who hold shares of TSYS common stock on behalf of their customers may not give a proxy to TSYS to vote those shares with respect to any of the proposals without specific instructions from their customers, as brokers, banks, and other nominees do not have discretionary voting power on the proposals that will be voted upon at the TSYS special meeting.

 

51


Table of Contents

Revocability of Proxies

If you are a holder of TSYS common stock of record, you may revoke your proxy at any time before it is voted by:

 

   

signing another proxy card with a later date and returning it to us prior to the TSYS special meeting;

 

   

voting by telephone or the Internet at a later time; or

 

   

attending in person and voting at the TSYS special meeting.

If you hold your shares of TSYS common stock through a broker, bank or other nominee, you should contact your broker, bank or other nominee to change your vote.

Attendance at the TSYS special meeting will not in and of itself constitute revocation of a proxy. A revocation or later-dated proxy received by TSYS after the vote will not affect the vote. TSYS’ corporate secretary’s mailing address is: Total System Services, Inc., One TSYS Way, Columbus, Georgia 31901, Attention: Corporate Secretary. If the TSYS special meeting is postponed or adjourned, it will not affect the ability of holders of TSYS common stock of record as of the record date to exercise their voting rights or to revoke any previously-granted proxy using the methods described above.

Delivery of Proxy Materials

As permitted by applicable law, only one (1) copy of this joint proxy statement/prospectus is being delivered to holders of TSYS common stock residing at the same address, unless such holders of TSYS common stock have notified TSYS of their desire to receive multiple copies of the joint proxy statement/prospectus.

If you hold shares of both TSYS common stock and Global Payments common stock, you will receive two (2) separate packages of proxy materials.

TSYS will promptly deliver, upon oral or written request, a separate copy of the joint proxy statement/prospectus to any holder of TSYS common stock residing at an address to which only one (1) copy of such document was mailed. Requests for additional copies should be directed to TSYS’ Vice President of Investor Relations at (706) 644-6081 or TSYS’ proxy solicitor, D.F. King & Co., Inc., by calling toll-free at [             ].

Solicitation of Proxies

Global Payments and TSYS will share equally the expenses incurred in connection with the printing and mailing of this joint proxy statement/prospectus. To assist in the solicitation of proxies, TSYS has retained D.F. King & Co., Inc., and estimates it will pay D.F. King & Co., Inc., a fee of approximately $15,000 plus reimbursement of out-of-pocket expenses for D.F. King & Co., Inc.’s services. TSYS and its proxy solicitor will also request banks, brokers and other intermediaries holding shares of TSYS common stock beneficially owned by others to send this joint proxy statement/prospectus to, and obtain proxies from, the beneficial owners and may reimburse such record holders for their reasonable out-of-pocket expenses in so doing. Solicitation of proxies by mail may be supplemented by telephone and other electronic means, advertisements and personal solicitation by the directors, officers or employees of TSYS. No additional compensation will be paid to our directors, officers or employees for solicitation.

You should not send in any TSYS stock certificates with your proxy card (or, if you hold your shares in “street name” your voting instruction card). The exchange agent will mail a transmittal letter with instructions for the surrender of stock certificates to holders of TSYS common stock as soon as practicable after completion of the merger.

 

52


Table of Contents

Other Matters to Come Before the TSYS Special Meeting

TSYS management knows of no other business to be presented at the TSYS special meeting, but if any other matters are properly presented to the meeting or any adjournments thereof, the persons named in the proxies will vote upon them in accordance with the board of directors’ recommendations.

Assistance

If you need assistance in completing your proxy card, have questions regarding TSYS’ special meeting or would like additional copies of this joint proxy statement/prospectus, please contact Investor Relations at (706) 644-6081 or TSYS’ proxy solicitor, D.F. King & Co., Inc., by calling toll-free at [            ].

 

53


Table of Contents

TSYS PROPOSALS

Proposal 1: TSYS Merger Proposal

TSYS is asking holders of TSYS common stock to approve the merger agreement and the transactions contemplated thereby, including the merger. Holders of TSYS common stock should read this joint proxy statement/prospectus carefully and in its entirety, including the annexes, for more detailed information concerning the merger agreement and the merger. A copy of the merger agreement is attached to this joint proxy statement/prospectus as Annex A.

After careful consideration, the TSYS board of directors, by a unanimous vote of all directors, determined that the merger, the merger agreement and the transactions contemplated by the merger agreement are advisable and in the best interests of TSYS and its shareholders and unanimously adopted and approved the merger agreement, the merger and the other transactions contemplated by the merger agreement. See the section entitled “The Merger—TSYS’ Reasons for the Merger; Recommendation of TSYS’ Board of Directors” beginning on page [    ] for a more detailed discussion of the TSYS board of directors’ recommendation.

The TSYS board of directors unanimously recommends a vote “FOR” the TSYS merger proposal.

Proposal 2: TSYS Compensation Proposal

Pursuant to Section 14A of the Exchange Act and Rule 14a-21(c) thereunder, TSYS is seeking a non-binding, advisory shareholder approval of the compensation of TSYS’ named executive officers that is based on or otherwise relates to the merger as disclosed in the section entitled “The Merger—Interests of TSYS’ Directors and Executive Officers in the Merger—Quantification of Payments to TSYS’ Named Executive Officers—Golden Parachute Compensation” beginning on page [    ]. The proposal gives holders of TSYS common stock the opportunity to express their views on the merger-related compensation of TSYS’ named executive officers.

Accordingly, TSYS is asking holders of TSYS common stock to vote “FOR” the adoption of the following resolution, on a non-binding advisory basis:

“RESOLVED, that the compensation that will or may be paid or become payable to TSYS’ named executive officers, in connection with the merger, and the agreements or understandings pursuant to which such compensation will or may be paid or become payable, in each case as disclosed pursuant to Item 402(t) of Regulation S-K in “The Merger—Interests of TSYS’ Directors and Executive Officers in the Merger—Quantification of Payments to TSYS’ Named Executive Officers—Golden Parachute Compensation” are hereby APPROVED.”

The vote on the advisory compensation proposal is a vote separate and apart from the votes on the proposals to approve the TSYS merger proposal and approve the TSYS adjournment proposal. Accordingly, if you are a holder of TSYS common stock, you may vote to approve the TSYS merger proposal and/or the TSYS adjournment proposal and vote not to approve the TSYS compensation proposal, and vice versa. If the merger is completed, the merger-related compensation will be paid to TSYS’ named executive officers to the extent payable in accordance with the terms of the compensation agreements and arrangements even if holders of TSYS common stock fail to approve the advisory vote regarding merger-related compensation.

The TSYS board of directors unanimously recommends a vote “FOR” the advisory TSYS compensation proposal.

Proposal 3: TSYS Declassification Proposal

Pursuant to the merger agreement, Global Payments will, subject to the requisite vote of Global Payments’ shareholders to approve the Global Payments declassification proposal, amend its articles of incorporation to

 

54


Table of Contents

declassify its board of directors and provide for the annual election of directors, effective only upon the completion of the merger and effective as of the effective time. Even though TSYS does not have a classified board (i.e., its directors are elected annually) and the Global Payments declassification proposal is not a condition to the closing of the merger, the SEC has issued interpretive guidance with respect to the “unbundling” of proposals under the Exchange Act that requires TSYS shareholders (in their capacity as shareholders of TSYS) to also separately vote on the amendment to Global Payments’ articles of incorporation to declassify Global Payments’ board of directors and provide for the annual election of directors. A copy of the Global Payments declassification articles amendment is attached to this joint proxy statement/prospectus as Annex G. Holders of TSYS common stock should read the Global Payments declassification articles amendment in its entirety.

Under the Global Payments declassification articles amendment, each director elected at each annual meeting, including the 2020 annual meeting and thereafter, would be elected for a one-year term, including any director appointed to a newly created directorship or to fill a vacancy. Consequently, if shareholders of Global Payments approve the Global Payments declassification articles amendment and the merger is completed, the entire board of directors will be subject to election at next year’s annual shareholders meeting. If shareholders of Global Payments do not approve the Global Payments declassification articles amendment or if the merger is not completed, the Global Payments board of directors will remain classified and directors of Global Payments will continue to serve three-year terms.

In the event that the Global Payments declassification articles amendment is not adopted as of the effective time, Global Payments and TSYS will cooperate reasonably and in good faith in an effort to apportion the continuing Global Payments directors, on the one hand, and the continuing TSYS directors, on the other hand, as nearly evenly as is practicably possible among the different classes of the board of directors of the combined company as of the effective time so that as nearly equal a number of the continuing Global Payments directors, on the one hand, and the continuing TSYS directors, on the other hand, as is practicably possible stand for election at the first annual meeting of shareholders of the combined company following the effective time.

The vote on the TSYS declassification proposal is a vote separate from the vote on the TSYS merger proposal. Approval by TSYS’ shareholders of the TSYS declassification proposal is not a condition to completion of the merger. The votes received by TSYS shareholders with respect to the TSYS declassification proposal are advisory and will not be binding on TSYS or Global Payments (or the combined company that results from the merger) regardless of whether the TSYS merger proposal is approved. If Global Payments’ shareholders approve the Global Payments declassification articles amendment, such amendment will be effective only upon completion of the merger and effective as of the effective time. For more information on the existing rights of TSYS shareholders and their post-merger rights as shareholders of the combined company, please see the section entitled “Comparison of Shareholders’ Rights” beginning on page [    ].

The TSYS board of directors unanimously recommends a vote “FOR” the advisory TSYS declassification proposal.

Proposal 4: TSYS Adjournment Proposal

The TSYS special meeting may be adjourned to another time or place, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the TSYS special meeting to approve the TSYS merger proposal.

If, at the TSYS special meeting, the number of shares of TSYS common stock present or represented and voting in favor of the TSYS merger proposal is insufficient to approve the TSYS merger proposal, TSYS intends to move to adjourn the TSYS special meeting to enable the TSYS board of directors to solicit additional proxies for approval of the merger. In that event, TSYS will ask holders of TSYS common stock to vote upon the TSYS adjournment proposal, but not the TSYS merger proposal, the TSYS compensation proposal, or the TSYS declassification proposal.

 

55


Table of Contents

In this proposal, TSYS is asking holders of TSYS common stock to authorize the holder of any proxy solicited by the TSYS board of directors on a discretionary basis to vote in favor of adjourning the TSYS special meeting to another time and place for the purpose of soliciting additional proxies, including the solicitation of proxies from holders of TSYS common stock who have previously voted.

The TSYS board of directors unanimously recommends a vote “FOR” the TSYS adjournment proposal.

 

56


Table of Contents

INFORMATION ABOUT GLOBAL PAYMENTS

Global Payments is a leading worldwide provider of payment technology and software solutions delivering innovative services to its customers globally. Its technologies, services and employee expertise enable it to provide a broad range of solutions that allow its customers to accept various payment types and operate their businesses more efficiently. Global Payments distributes its services across a variety of channels in 32 countries throughout North America, Europe, the Asia-Pacific region and Brazil and operates in three reportable segments: North America, Europe and Asia-Pacific.

Global Payments was incorporated in 2000 and spun-off from its former parent company in 2001. Including its time as part of its former parent company, Global Payments has been in the payment technology services business since 1967. Since its spin-off, Global Payments has expanded in existing markets and into new markets internationally by pursuing further acquisitions and joint ventures. In 2016, Global Payments merged with Heartland, which significantly expanded its small and medium-sized enterprise distribution, customer base and vertical reach in the United States.

Global Payments is organized under the laws of the state of Georgia. The address and telephone number of its executive offices are 3550 Lenox Road, Atlanta, Georgia 30326, and (770) 829-8000.

Global Payments common stock is traded on the NYSE under the symbol “GPN”. Additional information about Global Payments and its subsidiaries is included in documents incorporated by reference in this joint proxy statement/prospectus. See the section entitled “Where You Can Find More Information” beginning on page [    ].

 

57


Table of Contents

INFORMATION ABOUT TSYS

Total System Services, Inc. is a global payment solutions provider headquartered in Columbus, Georgia. TSYS provides payment processing services, merchant services and related payment services to financial and nonfinancial institutions. In addition, TSYS provides general purpose reloadable prepaid debit and payroll cards, demand deposit accounts and other financial service solutions to the underbanked and other consumers and businesses. TSYS’ services are provided through three operating segments: Issuer Solutions, Merchant Solutions and Consumer Solutions. Through the Issuer Solutions segment, TSYS processes information through its cardholder systems to financial and nonfinancial institutions throughout the United States and internationally. The Merchant Solutions segment provides merchant services to merchant acquirers and merchants primarily in the United States. The Consumer Solutions segment provides financial service solutions to consumers and businesses in the United States. TSYS was incorporated in 1982 and spun-off from its former parent company in 2007.

TSYS’ common stock is traded on the NYSE under the symbol “TSS”.

TSYS’ principal office is located at One TSYS Way, Columbus, Georgia 31901, and its telephone number at that location is (706) 644-6081. Additional information about TSYS and its subsidiaries is included in documents incorporated by reference in this joint proxy statement/prospectus. See the section entitled “Where You Can Find More Information” beginning on page [    ].

 

58


Table of Contents

THE MERGER

This section of the joint proxy statement/prospectus describes material aspects of the merger. This summary may not contain all of the information that is important to you. You should carefully read this entire joint proxy statement/prospectus and the other documents we refer you to for a more complete understanding of the merger. In addition, we incorporate important business and financial information about each of us into this joint proxy statement/prospectus by reference. You may obtain the information incorporated by reference into this joint proxy statement/prospectus without charge by following the instructions in the section entitled “Where You Can Find More Information” beginning on page [    ].

Terms of the Merger

Each of the Global Payments and TSYS boards of directors has unanimously approved the merger agreement. The merger agreement provides that TSYS will merge with and into Global Payments, with Global Payments as the surviving corporation.

In the merger, each share of TSYS common stock issued and outstanding immediately prior to the effective time (other than certain shares held by Global Payments or TSYS) will be converted into the right to receive 0.8101 shares of Global Payments common stock. No fractional shares of Global Payments common stock will be issued in connection with the merger, and holders of TSYS common stock will be entitled to receive cash in lieu thereof.

Holders of Global Payments common stock and holders of TSYS common stock are being asked to approve the merger agreement. See the section entitled “The Merger Agreement” beginning on page [    ] for additional and more detailed information regarding the legal documents that govern the merger, including information about the conditions to the completion of the merger and the provisions for terminating or amending the merger agreement.

Background of the Merger

Each of the TSYS board of directors and senior management team and the Global Payments board of directors and senior management team regularly reviews each company’s respective independent strategic plans, and corporate policies and direction, and considers various strategic alternatives potentially available, all with the goal of enhancing value for their respective shareholders and delivering the best possible services to their customers.

M. Troy Woods, TSYS’ Chairman, President and Chief Executive Officer, also regularly engages in discussions with the Chief Executive Officers of other companies in TSYS’ industry and reports those discussions to Kriss Cloninger III, TSYS’ independent Lead Director, as well as the full TSYS board of directors.

Jeffrey S. Sloan, Global Payments’ Chief Executive Officer, similarly engages in discussions with the Chief Executive Officers of other companies in Global Payments’ industry, including with respect to potential acquisition or strategic business combination transaction opportunities that may be available to Global Payments, and reports those discussions to William I Jacobs, Global Payments’ Chairman, as well as the full Global Payments board of directors.

From time to time over the past several years, Messrs. Sloan and Woods have had informal discussions regarding industry trends and conditions, and each company’s respective businesses. During the course of these discussions, Mr. Sloan had on occasion previously expressed to Mr. Woods Global Payments’ interest in potentially exploring a strategic business combination transaction between the two companies. No substantive or specific transaction terms were discussed during any such prior discussions, and Mr. Woods conveyed to Mr. Sloan at those times that the TSYS board of directors continued to focus on TSYS’ execution of its current strategy and operating as an independent, stand-alone company.

 

59


Table of Contents

On January 18, 2019, Mr. Sloan contacted Mr. Woods and proposed a meeting the following week, which Mr. Woods agreed to.

On January 25, 2019, Mr. Woods met with Mr. Sloan in Columbus, Georgia. At the meeting, Mr. Sloan expressed Global Payments’ interest in exploring a potential strategic business combination transaction in which Global Payments would acquire TSYS. Mr. Sloan stated that Global Payments would pay a market premium to acquire TSYS, but did not propose a purchase price. Mr. Sloan also discussed with Mr. Woods the general framework of such a transaction, including potential synergies and the cultural fit between Global Payments and TSYS. Mr. Sloan also stated that the combined company would have dual headquarters in Atlanta, Georgia and Columbus, Georgia, and that senior leadership roles of the combined company would be discussed. Following this discussion, Mr. Woods informed Mr. Sloan that TSYS was focused on executing its strategy as an independent, stand-alone company, but that the TSYS board of directors is and has always been willing to consider strategic alternatives that may enhance shareholder value.

On February 5, 2019, the Global Payments board of directors met for a regularly scheduled meeting. At the meeting, Global Payments senior management discussed with the Global Payments board of directors the announcement of the merger between Fiserv, Inc. and First Data Corporation and the potential for continuing consolidation and change within the payments and financial services industries. Mr. Sloan also reported to the Global Payments board of directors the discussions he had with Mr. Woods regarding a potential business combination.

On February 7, 2019, the TSYS board of directors met for a regularly scheduled meeting. Representatives of King & Spalding LLP, TSYS’ legal advisors and which we refer to as “King & Spalding”, were also present. At the meeting, TSYS senior management discussed with the TSYS board of directors the pace of change and consolidation taking place within the payments and financial services industries, and the impact that this change and consolidation may have on TSYS’ business. Mr. Woods also reported to the TSYS board of directors the discussions he had with Mr. Sloan regarding a potential business combination. Representatives of King & Spalding discussed with the TSYS board of directors its fiduciary duties under applicable law.

Also at this TSYS board of directors meeting, TSYS senior management reviewed the company’s strategy as part of its ordinary course annual strategic review process. This review included a discussion of TSYS’ financial performance and its business model, as well as a discussion of current payments industry competitors and trends, key growth opportunities in TSYS’ areas of focus within the payments industry, and key risks to TSYS’ business. TSYS senior management also discussed with the TSYS board of directors the company’s strategic alternatives, which included continuing to execute TSYS’ strategy as an independent, stand-alone company, pursuing growth through M&A transactions reasonably available to TSYS, and pursuing a potential sale of TSYS to a third party. During this discussion, TSYS senior management recommended to the TSYS board of directors that TSYS focus on executing its current strategy and continuing to operate as an independent, stand-alone company, while also monitoring market developments and evaluating opportunities that may arise involving a transformative business combination transaction that would offer superior long-term value to TSYS’ shareholders. Following discussion, the TSYS board of directors expressed support for this approach.

On or about March 11, 2019, Mr. Sloan contacted Mr. Woods and proposed a meeting with Mr. Woods to continue their previous discussion. Mr. Woods agreed to the meeting. On March 12, 2019, Mr. Sloan informed Mr. Jacobs of his upcoming meeting with Mr. Woods and they discussed a proposed non-binding indication of interest that Mr. Sloan intended to provide Mr. Woods at the meeting.

On March 15, 2019, Mr. Sloan met with Mr. Woods in Columbus, Georgia. At the meeting, Mr. Sloan proposed that TSYS and Global Payments explore a potential strategic business combination in which the two companies would combine in an all-stock merger transaction. Mr. Sloan then discussed with Mr. Woods possible terms of a potential merger of equals transaction, which terms were summarized in a written non-binding indication of interest that Mr. Sloan provided to Mr. Woods at this meeting and which we refer to as the “March non-binding proposal.”

 

60


Table of Contents

Under the March non-binding proposal, TSYS’ shareholders would receive all-stock consideration of $105 to $110 per TSYS share (representing an implied premium of 12% to 17% based on TSYS’ March 13, 2019 closing share price of $93.79) through a fixed exchange ratio to be determined at a later date, which would have resulted in TSYS’ shareholders collectively owning approximately 47% to 48% of the equity of the combined company. In addition, the March non-binding proposal provided, among other things, that Mr. Sloan would be the Chief Executive Officer of the combined company, and that the board of directors of the resulting entity would consist of ten (10) directors, split evenly among directors from the TSYS and Global Payments boards of directors. The March non-binding proposal further provided that Mr. Woods would serve as Executive Chair of the combined company, and Paul M. Todd, TSYS’ Senior Executive Vice President and Chief Financial Officer and Cameron M. Bready, Global Payments’ Senior Executive Vice President and Chief Financial Officer, would be executives of the combined company, with other senior management positions to be agreed upon at a later date. The March non-binding proposal also stated that the combined company would be co-headquartered in Atlanta, Georgia, and Columbus, Georgia.

During their March 15 meeting, Messrs. Sloan and Woods also discussed the potential merits of, and other considerations associated with, the possible transaction, including the potential strategic benefits and value that could accrue to the shareholders of each company as a result of a potential transaction and the cultural fit of TSYS and Global Payments. At the conclusion of the meeting, Mr. Woods informed Mr. Sloan that although TSYS’ management and board were focused on executing TSYS’ stand-alone plan, he would discuss Global Payments’ proposal with TSYS’ board.

On March 19, 2019, Mr. Woods provided a report to Mr. Cloninger of his March 15 meeting with Mr. Sloan as well as the March non-binding proposal.

On March 28, 2019, the TSYS board of directors met for a special telephonic meeting. Representatives of King & Spalding were also present. At the meeting, Mr. Woods discussed with the TSYS board of directors the continuing pace of change and consolidation occurring within the payments and financial services industries, including the January 16, 2019 announcement of the proposed Fiserv, Inc. and First Data Corporation merger, the February 7, 2019 announcement of the proposed BB&T Corporation and SunTrust Banks, Inc. merger, and the March 18, 2019 announcement of the proposed Fidelity National Information Services, Inc. and Worldpay, Inc. merger, and the impact that this change and consolidation may have on TSYS’ business. Mr. Woods discussed in detail with the TSYS board of directors the publicly announced terms of recent transactions in the payments industry, including the governance and financial terms of the transactions, the leverage profile of the resulting companies, and recent analyst commentary and market data on the transactions and payments industry. Representatives of King & Spalding discussed with the TSYS board of directors its fiduciary duties in the context of a potential transaction. Mr. Woods also reviewed the March non-binding proposal with the TSYS board of directors. During this discussion, Mr. Woods recommended that, in light of the ongoing consolidation and change in the payments and financial services industries as well as the pace of this consolidation and change, he believed it would be reasonable and prudent for TSYS to have further exploratory discussions with Global Payments to explore and mature the March non-binding proposal and to also again review TSYS’ strategic alternatives to determine if Global Payments’ proposal or any other strategic alternative would be most likely to maximize TSYS’ long-term shareholder value.

After discussion, the TSYS board of directors expressed support for Mr. Woods’ recommendation that TSYS review its strategic alternatives, engage in further discussions with Global Payments, and engage financial advisors to assist TSYS with this review.

Following the March 28, 2019 TSYS board of directors meeting, members of TSYS senior management worked with King & Spalding, Goldman Sachs and Greenhill to evaluate Global Payments’ business and the March non-binding proposal based on publicly available information, as well as TSYS’ strategic alternatives. TSYS senior management selected, and the TSYS board of directors ultimately approved the engagement of, Goldman Sachs and Greenhill as financial advisors due to TSYS’ prior experience working with each of Goldman Sachs

 

61


Table of Contents

and Greenhill on strategic transactions, and their belief that each of Goldman Sachs and Greenhill had extensive experience advising companies in the payments industry, as well as significant experience providing strategic and financial advisory services in comparable transactions.

During this time, Global Payments and members of its senior management were similarly working with Global Payments’ legal advisor, Wachtell, Lipton, Rosen & Katz, which we refer to as “Wachtell Lipton,” and its financial advisors, BofA Merrill Lynch and J.P. Morgan, to evaluate TSYS’ business based on publicly available information, as well as Global Payments’ strategic alternatives.

On April 5, 2019, Mr. Woods met with Mr. Sloan in Columbus, Georgia. At the meeting, Mr. Woods and Mr. Sloan further discussed the strategic rationale of the proposed combination, the potential senior management and board structure of the combined company, possible revenue and expense synergies that could be achievable in the transaction, as well as a potential transaction timeline. Also at this meeting, Messrs. Sloan and Woods discussed certain governance and other terms of a potential transaction, including maintaining TSYS’ dividend yield on a pro forma basis, providing that the board of directors of the combined company be elected annually (rather than in separate classes as currently provided for in Global Payments’ organizational documents), and that the membership of the committees of the board of directors of the combined company be split evenly among TSYS and Global Payments directors. Also at this meeting, Mr. Woods asked that Global Payments consider revising the proposed consideration mix to include a cash component to allow the TSYS board of directors to evaluate the full range of potential transaction structures available in a possible transaction with Global Payments. Mr. Sloan stated that Global Payments would deliver a revised non-binding indication of interest the following week reflecting their discussion.

Following this discussion, Mr. Sloan discussed with Mr. Jacobs his discussion with Mr. Woods and the revised non-binding indication of interest he intended to provide to Mr. Woods.

On April 8, 2019, Mr. Sloan provided Mr. Woods with a revised non-binding indication of interest, which we refer to as the “April non-binding proposal”. The April non-binding proposal proposed a combination of TSYS and Global Payments, with 90% of the consideration payable in shares of Global Payments stock, and 10% of the consideration consisting of cash, with the stock consideration payable based on a fixed exchange ratio to be determined at a later date. Under the April non-binding proposal, TSYS’ shareholders would receive consideration of $110 to $112.50 per TSYS share (representing an implied premium of 13% to 15% based on TSYS’ April 5, 2019 closing share price of $97.43) and collectively own approximately 45% of the combined company. The April non-binding proposal also stated that the combined company would maintain TSYS’ existing dividend yield.

The April non-binding proposal further provided, among other things, that the board of directors of the combined company would be elected annually (rather than in separate classes), that the Chairs of the board committees of the combined company would be split equally between Global Payments and TSYS directors, and that a member of Global Payments’ Board of Directors would be Lead Independent Director of the combined company. Like the March non-binding proposal, the April non-binding proposal provided that Mr. Sloan would be the Chief Executive Officer of the combined company, that the board of directors of the combined company would consist of ten (10) directors, split evenly among directors from the TSYS and Global Payments boards of directors, with Mr. Woods as Executive Chair of the combined company, and that Mr. Todd and Mr. Bready would be executives of the combined company, with other senior management positions to be agreed upon at a later date. The April non-binding proposal also provided for the combined company to maintain co-headquarters in Atlanta, Georgia, and Columbus, Georgia.

On April 10, 2019, Messrs. Woods and Sloan spoke by telephone. During this discussion, Messrs. Woods and Sloan discussed potential synergies that could be achievable in the transaction. Messrs. Woods and Sloan also discussed further the governance of the combined company, including, among other things, providing that the Chairs of each of the Technology Committee and the Nominating and Governance Committee be filled by a

 

62


Table of Contents

TSYS designated director and the Chairs of each of the Audit Committee and Compensation Committee be filled by a Global Payments designated director. Mr. Woods also informed Mr. Sloan that, while TSYS and its advisors were still reviewing the April non-binding proposal, TSYS believed that the existing TSYS Lead Director should be designated the Lead Independent Director of the combined company.

During the weeks of April 8, 2019, and April 15, 2019, Mr. Woods discussed the potential transaction and the April non-binding proposal with Mr. Cloninger and each other TSYS director then on the TSYS board of directors. In addition, throughout the period of Mr. Sloan’s continuing discussions with Mr. Woods, and in advance of the Global Payments April 25, 2019 board meeting, Mr. Sloan regularly updated Mr. Jacobs on the status of discussions with TSYS regarding a potential transaction.

Messrs. Woods and Sloan spoke by telephone on April 16, 2019. During this discussion, Mr. Sloan and Mr. Woods further discussed the makeup of the board of directors of the combined company, including Mr. Woods’ request that TSYS’ existing Lead Director be the Lead Independent Director of the combined company. Messrs. Woods and Sloan also discussed potential synergies that could be achievable in the transaction. Mr. Woods informed Mr. Sloan that TSYS had an upcoming board meeting scheduled for May 2, 2019 and that the April non-binding proposal would be considered and discussed further by the TSYS board of directors at that meeting. Mr. Sloan also informed Mr. Woods that he would further discuss the potential transaction with the Global Payments board of directors at a meeting scheduled for April 25, 2019.

On April 25, 2019, the Global Payments board of directors met in person in Atlanta, Georgia for a regularly scheduled board meeting. Representatives of Wachtell Lipton, BofA Merrill Lynch and J.P. Morgan were also present. At this meeting, Global Payments senior management updated the Global Payments’ board on the discussions with TSYS, including the April non-binding proposal and Mr. Sloan’s subsequent discussions with Mr. Woods. Representatives of BofA Merrill Lynch and J.P. Morgan also reviewed with the Global Payments board of directors potential strategic alternatives for Global Payments. Representatives of BofA Merrill Lynch and J.P. Morgan also provided an overview of the proposed transaction with TSYS, including preliminary financial analyses. As part of this discussion, representatives of BofA Merrill Lynch and J.P. Morgan also reviewed and discussed with the Global Payments board of directors the publicly disclosed terms of recent mergers of equals and other large transactions. Following this discussion, the Global Payments board of directors authorized Global Payments senior management to continue discussions with TSYS regarding a potential business combination.

On April 26, 2019, Mr. Sloan called Mr. Woods and informed him that the Global Payments board of directors was supportive of continuing exploratory discussions regarding a potential transaction.

On May 1, 2019, the Corporate Governance and Nominating Committee of the TSYS board of directors, which we refer to as the “TSYS Governance Committee”, reviewed the proposed terms of Goldman Sachs’ engagement as financial advisor to TSYS pursuant to TSYS’ Policy on Related Party Transactions due to the fact that Walter W. Driver, Jr., a member of the TSYS board of directors, was a Senior Advisor to Goldman Sachs. During the meeting, the TSYS Governance Committee was informed by TSYS senior management that Mr. Driver did not participate in the decision to potentially retain Goldman Sachs and that he would not receive any special compensation as a result of Goldman Sachs’ possible engagement. Representatives of King & Spalding also reviewed with the TSYS Governance Committee the discussions with representatives of Goldman Sachs regarding the terms of its proposed engagement, and also reviewed with the TSYS Governance Committee financial advisory fees paid in other comparable transactions. After discussion, the TSYS Governance Committee determined that the proposed terms of Goldman Sachs’ engagement met the standards for approval in TSYS’ Policy on Related Party Transactions and unanimously approved such engagement from a related party transactions perspective.

On May 2, 2019, the TSYS board of directors met in person in Columbus, Georgia for a regularly scheduled meeting. Representatives of King & Spalding, Goldman Sachs, and Greenhill were also present at the meeting.

 

63


Table of Contents

During an executive session at the beginning of the meeting, Mr. Woods updated the TSYS board of directors on the status of the discussions regarding the potential transaction with Global Payments, including the terms of the April non-binding proposal. TSYS senior management team delivered a presentation to the TSYS board of directors on the business and strategic implications of the potential business combination. Representatives of Goldman Sachs, Greenhill and TSYS senior management also reviewed with the TSYS board of directors potential strategic alternatives for TSYS, including TSYS continuing to operate as an independent, stand-alone company, pursuing growth through M&A transactions reasonably available to TSYS, considering a potential merger of equals transaction, and considering a potential sale of TSYS to a third party. Representatives of Goldman Sachs and Greenhill also provided an overview of the proposed transaction with Global Payments, including preliminary financial analyses. As part of this discussion, representatives of Goldman Sachs, Greenhill and King & Spalding also reviewed and discussed with the TSYS board of directors publicly disclosed terms of recent mergers of equals and other large transactions, including the governance terms, premiums relative to share prices, consideration mix, credit ratings and leverage targets of the relevant entities, and announced synergy targets. Representatives of King & Spalding discussed with the TSYS board of directors their fiduciary duties in relation to a potential transaction. TSYS senior management and representatives of King & Spalding also discussed with the TSYS board of directors the terms of Goldman Sachs’ and Greenhill’s respective proposed engagements, and also reviewed the relationship disclosures provided by Goldman Sachs and Greenhill, following which the TSYS board of directors determined that the relationships disclosed would not preclude Goldman Sachs or Greenhill from serving as TSYS’ financial advisor in connection with a potential transaction with Global Payments. The TSYS board of directors also discussed the prospect of TSYS and Global Payments entering into a nondisclosure agreement in order to facilitate discussions regarding the potential transaction.

Following these discussions, the TSYS board of directors expressed support for continuing the exploratory discussions regarding the potential transaction with Global Payments, authorized TSYS to formally engage Goldman Sachs and Greenhill as TSYS’ financial advisors (with Mr. Driver abstaining from this authorization), and authorized TSYS management and TSYS’ advisors to engage in a mutual due diligence process with Global Payments based on non-public information if Global Payments were willing to pursue an all-stock transaction.

On May 3, 2019, Mr. Woods contacted Mr. Sloan and informed him that the TSYS board of directors was supportive of continuing exploratory discussions regarding a potential transaction. Mr. Woods also proposed an in-person meeting with Mr. Sloan the following week to discuss the April non-binding proposal. Mr. Sloan agreed to meet with Mr. Woods.

Also on May 3, 2019, Goldman Sachs and Greenhill were each formally engaged by TSYS to act as independent financial advisors to TSYS in connection with the potential transaction.

On May 7, 2019, Mr. Woods and Mr. Sloan met in Atlanta, Georgia. At the meeting, Messrs. Woods and Sloan discussed TSYS’ and Global Payments’ relative cultures as well as the potential benefits to TSYS and Global Payments shareholders that could result from the proposed transaction. During the discussion, Mr. Woods expressed TSYS’ and the TSYS board of directors’ interest in further exploring a potential all-stock transaction with Global Payments, which would allow TSYS shareholders to fully participate in the upside of the combined company, in lieu of the mixed consideration transaction contemplated by the April non-binding proposal. Mr. Woods noted to Mr. Sloan that TSYS believed that an all-stock transaction should provide that the pro-forma ownership of the combined company resulting from any such transaction be closer to 50%/50% relative to TSYS’ and Global Payments’ shareholders. Messrs. Woods and Sloan discussed expanding the size of the combined company’s board of directors relative to the previously discussed ten (10) directors and instead having a combined board comprised of twelve (12) directors in order to benefit from the knowledge, expertise and experience of a greater number of both TSYS and Global Payments directors, with the combined board to be split evenly among directors from the TSYS and Global Payments boards of directors, and with the Chairs of the Technology Committee and the Nominating and Governance Committee filled by a TSYS designated director and a Global Payments designated director serving as Chairs of the other board committees. Messrs. Woods and Sloan also discussed maintaining a senior management team of the combined company evenly split among the

 

64


Table of Contents

TSYS and Global Payments management teams. Mr. Sloan stated that Global Payments would provide a revised non-binding indication of interest reflecting their discussion. Messrs. Woods and Sloan also agreed that TSYS and Global Payments should execute a customary nondisclosure agreement and conduct further mutual due diligence.

Following this meeting, Mr. Sloan discussed with Mr. Jacobs his discussion with Mr. Woods and the proposed revised non-binding indication of interest. Thereafter, on the evening of May 7, 2019, Mr. Sloan provided Mr. Woods with a revised non-binding indication of interest, which we refer to as the “May non-binding proposal”. The May non-binding proposal proposed an all-stock merger transaction with a fixed exchange ratio to be determined at a later date, with TSYS’ shareholders receiving consideration of $115 per TSYS share in the transaction (representing an implied premium of 16% based on TSYS’ May 7, 2019 closing share price of $99.48) and collectively owning approximately 48% of the combined company. Consistent with the April non-binding proposal, the May non-binding proposal also provided, among other things, that Mr. Woods would be Executive Chair, Mr. Sloan would be Chief Executive Officer, and Messrs. Todd and Bready would be executives of the combined company, with other management positions to be agreed upon at a later date.

In addition, the May non-binding proposal proposed that the board of directors of the combined company consist of twelve (12) members, split evenly among directors from the TSYS and Global Payments boards of directors, and that the Chairs of the Technology Committee and the Nominating and Governance Committee be filled by a TSYS designated director, with the Chairs of the Audit Committee and Compensation Committee filled by a Global Payments designated director. The May non-binding proposal also provided for the combined company to maintain co-headquarters in Atlanta, Georgia, and Columbus, Georgia, consistent with the April non-binding proposal and the March non-binding proposal.

On May 10, 2019, Mr. Woods called Mr. Sloan to clarify that TSYS was interested in continuing to discuss a potential transaction with Global Payments on the basis of a fixed exchange ratio that would result in the 48% pro forma ownership proposal set forth in the May non-binding proposal, subject to further due diligence and discussion with the TSYS board of directors.

Also on May 10, 2019, Mr. Sloan updated the members of the Global Payments board of directors on his conversations with Mr. Woods and the May non-binding proposal.

TSYS and Global Payments entered into a mutual nondisclosure agreement on May 10, 2019, which nondisclosure agreement contained a customary “standstill” provision, which “standstill” provision permitted each party to submit a confidential request to the other party seeking a waiver or amendment of the standstill restrictions.

On May 14, 2019, Messrs. Bready and Todd and other members of the TSYS and Global Payments management teams met in Atlanta, Georgia, to discuss possible synergies achievable in the potential transaction.

On May 14, 2019, Global Payments delivered to TSYS an initial draft of the merger agreement. The draft merger agreement included, among other matters, customary representations and warranties and covenants generally on a reciprocal basis, and customary closing conditions. In addition, the draft merger agreement provided that the parties would each be required to use its reasonable best efforts to obtain regulatory approvals and reflected the governance arrangements that had been discussed between Messrs. Woods and Sloan, including that TSYS’ existing Lead Director would serve as Lead Independent Director of the combined company.

During the period between May 21 and May 27, 2019, representatives of King & Spalding, on the one hand, and Wachtell Lipton, on the other hand, exchanged several drafts of the merger agreement and engaged in negotiations and discussions regarding the terms and conditions of the merger agreement.

On May 16, 2019, TSYS and Global Payments each opened their respective virtual data rooms to the other party.

On May 16, 2019, the senior management teams of TSYS and Global Payments met at King & Spalding’s office in New York, New York, together with their respective financial advisors, to further discuss a possible business

 

65


Table of Contents

combination transaction, including potential synergies, and continue their mutual due diligence review. The agenda included meetings on major business segments, technology, synergy opportunities, and corporate culture and human resources.

Following the management meetings, and through May 27, 2019, each of TSYS and Global Payments and their respective advisors continued to conduct business, legal and financial due diligence on the other party.

On May 19, 2019, Messrs. Woods and Sloan spoke by telephone and discussed the long-term strategy as well as potential senior leadership and board roles at the combined company, which roles had not been discussed in detail prior to this discussion.

On May 20, 2019, the TSYS board of directors met for a special telephonic meeting. Representatives of King & Spalding were also present. At the meeting, Mr. Woods and other members of TSYS senior management provided a detailed update on the status of the discussions with Global Payments, including the terms of the May non-binding proposal. Mr. Woods and other members of TSYS senior management also discussed the principal business opportunities and risks associated with the potential transaction. During the discussion, Mr. Woods noted that, while the May non-binding proposal contemplated that TSYS’ shareholders would own 48% of the combined company after closing, he believed it would be appropriate to further discuss with Mr. Sloan the possibility of TSYS shareholders owning approximately 48.5% of the combined company as well as the optimal level of synergies that could be achieved in the transaction.

Also at this May 20 meeting, Mr. Woods reviewed with the TSYS board of directors the ongoing governance discussions with Global Payments regarding the proposed transaction, including the potential roles of senior leadership and the board of directors of the combined company, as well as the leadership role that Mr. Woods would have at the combined company.

The TSYS board of directors then met in executive session with only the independent TSYS directors and representatives of King & Spalding present. During the executive session, the independent TSYS directors discussed whether it would be more appropriate for Mr. Woods to serve as Executive Chair, Chairman of the board of directors, or in some other capacity at the combined company. The independent TSYS directors noted Mr. Woods’ extensive leadership skills and business acumen, his significant experience with TSYS’ business, and the integral role that they believed he would play as part of the combined company if a transaction was agreed to. In this regard, the independent TSYS directors determined that it was in the best interests of TSYS and its shareholders for Mr. Woods to have a leading role at the combined company, either as Executive Chair, Chair of the board of directors, or in some other capacity, to ensure that TSYS and its shareholders would be appropriately represented on the combined company’s board if TSYS and Global Payments were to agree to a transaction. Following this discussion, the independent TSYS directors expressed support for continuing to pursue the potential transaction with Global Payments. The TSYS independent directors also requested that Mr. Cloninger work with Mr. Woods, Global Payments, and their respective advisors to resolve the open governance issues in the proposed transaction.

Following the TSYS board of directors meeting, Messrs. Woods and Sloan spoke by telephone. During their conversation, Mr. Woods informed Mr. Sloan that the TSYS board of directors was supportive of continuing to pursue a transaction and that TSYS and Global Payments should further discuss the pro forma ownership interest of TSYS shareholders in the combined company as well as the potential synergies that could be achievable in the transaction. Mr. Woods raised with Mr. Sloan the possibility of TSYS shareholders owning approximately 48.5% of the combined company instead of the 48% that had been previously discussed. Mr. Sloan stated that Global Payments would consider the request. Mr. Woods proposed that Global Payments and TSYS defer further discussion on the open governance issues in the transaction until the relative pro-forma shareholder ownership levels had been agreed upon.

On May 22, 2019, Messrs. Woods and Sloan spoke again by telephone to continue their previous discussion of the optimal level of synergies that could be achieved in the transaction as well as the pro forma shareholder

 

66


Table of Contents

ownership of the combined company. Mr. Sloan stated that he could not commit to a transaction in which TSYS shareholders would own more than 48% of the combined company.

On May 23, 2019, the Global Payments board of directors met for a special telephonic meeting. Representatives of Wachtell Lipton, BofA Merrill Lynch and J.P. Morgan were also present. During the meeting, Mr. Sloan, together with Mr. Bready and members of the Global Payments senior management team, updated the board on the status of discussions with TSYS regarding a potential transaction, and summarized the results of Global Payments’ due diligence review of TSYS. Also during the meeting, representatives of Wachtell Lipton, together with David L. Green, Global Payments’ Executive Vice President, General Counsel and Corporate Secretary, reviewed with the board the key terms of the draft merger agreement, as well as the board’s fiduciary duties in the context of a potential transaction.

Also on May 23, 2019, Mr. Woods discussed with Mr. Cloninger the pro-forma ownership interest that TSYS shareholders would have in the combined company as well as the open governance matters in the transaction. During these discussions, Messrs. Woods and Cloninger discussed Global Payments’ inability to commit to a transaction in which TSYS shareholders would own more than 48% of the combined company, and noted the significant potential value that the proposed transaction could deliver to TSYS’ shareholders if TSYS shareholders owned either 48% or 48.5% of the combined company. Messrs. Woods and Cloninger also discussed the optimal level of synergies that TSYS believed could be achieved in the transaction, the overall balanced nature of the proposed transaction in terms of board composition, senior management, governance and other considerations, as well as the need for the combined company to have a clearly defined leadership structure. Mr. Cloninger also discussed with Mr. Woods the extensive value that Mr. Woods’ leadership skills, business acumen, and expertise with TSYS’ business would bring to the combined company. In addition, Messrs. Cloninger and Woods discussed the role that they would play in consultation with Messrs. Sloan and Jacobs in shaping the corporate governance and other procedures and matters to reflect the best practices of TSYS and Global Payments as contemplated by the terms of the draft merger agreement. Following these discussions, Mr. Cloninger informed Mr. Woods that, subject to further discussion with the TSYS board of directors, he believed it would be appropriate for TSYS to agree to an exchange ratio that would result in TSYS shareholders owning 48% of the combined company, and for TSYS to agree for Mr. Woods to be Chair of the board of the combined company rather than Executive Chair.

Later in the day on May 23, 2019, Messrs. Sloan and Woods spoke by telephone and agreed that at least $300 million of run-rate cost synergies and at least $100 million of run-rate revenue synergies realized over a three-year period was the appropriate level of synergies to target achieving in the transaction. Mr. Woods also informed Mr. Sloan that TSYS would be willing to agree to an exchange ratio that resulted in TSYS shareholders owning 48% of the combined company, as proposed by Global Payments in the May non-binding proposal and further discussed by Mr. Woods and Mr. Sloan, and that he was also amenable to being Chair of the board of the combined company, subject to further discussions with the TSYS board of directors to be held at a meeting the following day. Mr. Sloan stated that this proposal would likely be acceptable to Global Payments, subject to further discussion with the Global Payments board of directors.

During the evening of May 23, 2019, Bloomberg published a report stating, among other matters, that TSYS and Global Payments were discussing a potential business combination transaction.

On May 24, 2019, the TSYS board of directors met for a special telephonic meeting. Representatives of King & Spalding, Goldman Sachs and Greenhill were also present. Prior to the meeting, the TSYS board of directors had received copies of the draft merger agreement and related documents and a summary of the terms of the transaction, as well as materials prepared by representatives of Goldman Sachs and Greenhill. During an executive session at the beginning of the meeting, Mr. Cloninger noted that he had discussed at length with Mr. Woods the unresolved governance and pro-forma ownership matters. Mr. Cloninger stated that, following these discussions, he and Mr. Woods believed that it would be in the best interests of TSYS and its shareholders for Mr. Woods to be the Chair of the board of directors of the combined company, and for TSYS to agree to an exchange ratio that resulted in TSYS shareholders owning 48% of the combined company.

 

67


Table of Contents

Also at this meeting, TSYS senior management discussed with the TSYS board of directors the status of the various transaction workstreams, including the due diligence investigation, the results of TSYS’ and Global Payments’ ratings agencies meetings, based on which the combined company is expected to have an investment grade credit rating, and integration and communication planning. Representatives of Goldman Sachs and Greenhill also reviewed with the TSYS board of directors their respective preliminary financial analyses of the proposed transaction. Representatives of King & Spalding reviewed the key terms of the draft merger agreement with the TSYS board of directors, as well as their fiduciary duties in the context of a potential transaction. Following discussion, the TSYS board of directors instructed the TSYS management team and TSYS’ advisors to present the final terms of the proposed transaction for review and consideration at a meeting to be held on May 27, 2019.

From May 24 to May 27, 2019, TSYS’ and Global Payments senior management along with representatives of King & Spalding and Wachtell Lipton continued to negotiate and finalize the merger agreement, including the disclosure schedules to the merger agreement and other related matters.

On May 27, 2019, the Global Payments board of directors held a special telephonic meeting with members of Global Payments senior management and representatives of Wachtell Lipton, BofA Merrill Lynch and J.P. Morgan present. Prior to the meeting, the Global Payments board of directors had received copies of the merger agreement and related documents and a summary of the terms of the transaction, as well as presentation materials prepared by representatives of BofA Merrill Lynch and J.P. Morgan, and current relationship disclosures provided by each of BofA Merrill Lynch and J.P. Morgan regarding prior engagements between each of BofA Merrill Lynch and J.P. Morgan, respectively, and Global Payments and TSYS, and compensation received by each of BofA Merrill Lynch and J.P. Morgan, respectively, for prior services rendered to Global Payments and TSYS.

Mr. Sloan, together with Mr. Bready and members of the Global Payments senior management team, updated the board on the status of discussions with TSYS regarding a potential transaction. Representatives of each of BofA Merrill Lynch and J.P. Morgan reviewed with the Global Payments board of directors their respective financial analyses of the exchange ratio and answered questions regarding such analyses. Representatives of BofA Merrill Lynch then rendered to the Global Payments board of directors an oral opinion, which was subsequently confirmed by delivery of a written opinion dated May 27, 2019, that, as of such date and based upon and subject to various assumptions and limitations described in BofA Merrill Lynch’s written opinion, the exchange ratio provided for in the merger was fair, from a financial point of view, to Global Payments. For a detailed discussion of BofA Merrill Lynch’s opinion, see the section entitled “—Opinions of Global Payments’ Financial Advisors—Opinion of BofA Merrill Lynch” beginning on page [    ]. Representatives of J.P. Morgan also rendered to the Global Payments board of directors an oral opinion, which was subsequently confirmed by delivery of a written opinion dated May 27, 2019, that, as of such date and based upon and subject to the factors and assumptions set forth in J.P. Morgan’s written opinion, the exchange ratio was fair, from a financial point of view, to Global Payments. For a detailed discussion of J.P. Morgan’s opinion, see the section entitled “—Opinions of Global Payments’ Financial Advisors—Opinion of J.P. Morgan” beginning on page [    ]. Also at the meeting, representatives of Wachtell Lipton, together with Mr. Green, reviewed with the board the final terms of the merger agreement and related transaction documents, as well as the board’s fiduciary duties in the context of the proposed transaction, as they had previously done.

Following these discussions and the delivery of the presentations, and after careful review and discussion by the Global Payments board of directors, including consideration of the factors described below under the heading “The Merger—Global Payments’ Reasons for the Merger; Recommendation of Global Payments’ Board of Directors” beginning on page [    ], the Global Payments board of directors unanimously determined that the merger agreement and the transactions contemplated thereby were advisable and in the best interests of Global Payments and its shareholders, and approved the merger agreement and the transactions contemplated thereby.

On May 27, 2019, the TSYS board of directors held a special telephonic meeting with members of TSYS senior management and representatives of King & Spalding, Goldman Sachs and Greenhill present. Prior to the

 

68


Table of Contents

meeting, the TSYS board of directors had received copies of the merger agreement and related documents and a summary of the terms of the transaction, as well as presentation materials prepared by representatives of Goldman Sachs and Greenhill.

Representatives of each of Goldman Sachs and Greenhill reviewed with the TSYS board of directors their respective financial analyses of the transaction and answered questions regarding such analyses. Representatives of Goldman Sachs rendered to the TSYS board of directors an oral opinion, which was subsequently confirmed by delivery of a written opinion dated May 27, 2019, that, as of such date and based upon and subject to the factors and assumptions set forth in Goldman Sachs’ written opinion, the exchange ratio pursuant to the merger agreement was fair from a financial point of view to the holders (other than Global Payments and its affiliates) of shares of TSYS common stock. For a detailed discussion of Goldman Sachs’ opinion, see the section entitled “—Opinions of TSYS’ Financial Advisors—Opinion of Goldman Sachs” beginning on page [    ]. Representatives of Greenhill also rendered to the TSYS board of directors an oral opinion, which was subsequently confirmed by delivery of a written opinion dated May 27, 2019, that, as of such date and based upon and subject to the limitations and assumptions set forth in Greenhill’s written opinion, the exchange ratio pursuant to the merger agreement was fair from a financial point of view to the holders of TSYS common stock. For a detailed discussion of Greenhill’s opinion, see the section entitled “—Opinions of TSYS’ Financial Advisors—Opinion of Greenhill” beginning on page [    ]. Also at the meeting, representatives of King & Spalding reviewed with the board the key terms of the draft merger agreement that had been negotiated between the parties. The TSYS board of directors also reviewed the compensation that may be payable to certain executives of TSYS as a result of the transaction. Representatives of Goldman Sachs and Greenhill also confirmed that there had been no changes to Goldman Sachs’ and Greenhill’s respective relationship disclosures as provided to the TSYS board of directors at the May 2, 2019 TSYS board of directors meeting.

Following these discussions and the delivery of the presentations, and after careful review and discussion by the TSYS board of directors, including consideration of the factors described below under the heading “The Merger—TSYS’ Reasons for the Merger; Recommendation of TSYS’ Board of Directors” beginning on page [    ], the TSYS board of directors unanimously determined that the merger agreement and the transactions contemplated thereby were advisable and in the best interests of TSYS and its shareholders, and approved the merger agreement and the transactions contemplated thereby.

On the evening of May 27, 2019, TSYS and Global Payments executed and delivered the merger agreement.

On the morning of May 28, 2019, the transaction was announced before the market opened in New York, New York.

Global Payments’ Reasons for the Merger; Recommendation of Global Payments’ Board of Directors

In reaching its decision to adopt and approve the merger agreement, the merger and the other transactions contemplated by the merger agreement, and to recommend that its shareholders approve the merger agreement, the Global Payments board of directors evaluated the merger agreement, the merger and the other transactions contemplated by the merger agreement in consultation with the Global Payments management, as well as Global Payments’ financial and legal advisors, and considered a number of factors, including the following material factors (which are presented below in no particular order and which were neither ranked nor weighted in any manner by the Global Payments board of directors):

 

   

each of Global Payments’, TSYS’, and the combined company’s business, operations, financial condition, asset quality, earnings, and prospects. In reviewing these factors, the Global Payments board of directors considered TSYS’ financial condition, that TSYS’ business and operations complement those of Global Payments, and that the merger and the other transactions contemplated by the merger agreement would create the leading worldwide payments technology company with significant scale and an exceptional financial profile, including a more diversified balance sheet, revenue streams and overall business mix, than Global Payments on a stand-alone basis;

 

69


Table of Contents
   

the strategic rationale for the merger, including the opportunity to further Global Payments’ position as the leading provider of technology-enabled, software-driven merchant payments solutions by substantially expanding Global Payments’ integrated payments and ecommerce and omnichannel solutions businesses in the United States and providing further opportunities for meaningful multinational omnichannel market share gains, the ability to expand into issuer solutions at scale through TSYS’ industry leading business, including the organic and inorganic growth opportunities expected to be realized through the combination of the issuing and acquiring businesses worldwide, and increasing Global Payments’ exposure to some of the fastest growing digital payments trends through TSYS’ issuer and consumer solutions businesses;

 

   

the Global Payments board of directors’ belief that TSYS’ earnings and prospects, and the synergies potentially available in the proposed merger, which included the Global Payments board of directors’ expectation that the merger will deliver at least $300 million of run-rate cost synergies and at least $100 million of run-rate revenue synergies over a three-year period, would create the opportunity for the combined company to have superior future earnings and prospects compared to Global Payments’ earnings and prospects on a stand-alone basis;

 

   

the complementary nature of the cultures of the two companies, including with respect to corporate purpose, strategic focus, target markets, client service and focus on innovation and people, and Global Payments management’s belief that the complementary cultures will facilitate the successful integration and implementation of the transaction;

 

   

the complementary nature of the products, customers and markets of the two companies, which Global Payments believes should provide the opportunity to mitigate risks and increase potential returns;

 

   

the diversified position of the combined company, which is expected to process in excess of 50 billion transactions annually in thirty-eight (38) countries physically and over one hundred (100) countries virtually, and serve nearly 3.5 million predominantly SMB merchant locations globally and over thirteen hundred (1,300) premier financial institutions, with an unmatched salesforce of over thirty-five hundred (3,500) sales and sales support professionals worldwide;

 

   

the Global Payments board of directors’ belief that the combined company will benefit from TSYS’ payment facilitation technologies and Global Payments’ extensive acquiring operations in thirty-one (31) countries outside the United States, which is expected to enable significant cross-sell opportunities for TSYS’ issuer solutions business internationally, while also providing additional access to faster growth markets;

 

   

the Global Payments board of directors’ expectation that the combined company will have the ability to leverage the scale and financial capabilities of the combined company to make additional investments in innovation and technology and to address competition and disruption in the payments and financial services industries and enhance customer offerings;

 

   

the pro forma financial profile of the combined company, including industry-leading organic growth and the expected approximately $2.5 billion of pro forma adjusted free cash flow, which is expected to provide flexibility to invest in innovation, pursue strategic acquisitions, and return capital to shareholders;

 

   

the terms and conditions of the merger agreement, including:

 

   

the provisions of the merger agreement setting forth the corporate governance of the combined company, including that Jeffrey S. Sloan would continue to serve as the Chief Executive Officer, M. Troy Woods would serve as Chairman, Kriss Cloninger III would serve as the Lead Independent Director, William I Jacobs would continue to serve as a member of the board of directors, Cameron M. Bready and Paul M. Todd would serve as executive officers, and the combined company’s board of directors would be comprised of an equal number of continuing Global Payments directors and continuing TSYS directors, each of which the Global Payments

 

70


Table of Contents
 

board of directors believes enhances the likelihood that the strategic benefits that Global Payments expects to achieve as a result of the merger will be realized;

 

   

the fact that the exchange ratio is fixed, with no adjustment in the merger consideration to be received by TSYS shareholders as a result of possible increases or decreases in the trading price of TSYS or Global Payments’ stock following the announcement of the merger, which the Global Payments board of directors believed was consistent with market practice for transactions of this type and with the strategic purpose of the transaction;

 

   

the customary and reciprocal nature of the representations, warranties and covenants of Global Payments and TSYS in the merger agreement;

 

   

the flexibility permitted under the interim operating covenants which restrict the conduct of TSYS’ business prior to closing of the merger, and the fact that Global Payments is subject to substantially similar provisions;

 

   

the parties’ covenants to use their respective reasonable best efforts to obtain regulatory approvals, including the commitment of the parties to agree to divestitures or other remedies (other than divestitures or remedies that would reasonably be expected to be material and adverse to the combined company and its subsidiaries, taken as a whole, after giving effect to the merger, and including the projected synergies expected to result therefrom);

 

   

the deal protection and termination provisions of the merger agreement, including Global Payments’ right to receive the termination fee of $860 million if the merger agreement is terminated under certain circumstances, including (i) in the event that the TSYS board of directors no longer recommends that TSYS shareholders vote “FOR” the proposal to approve the merger agreement or (ii) in the event that TSYS breaches its no-shop or related covenants in any material respects; and

 

   

the review of the Global Payments board of directors, with the assistance of Global Payments’ advisors, of the terms and conditions of other recent comparable transactions and its overall belief that the terms of the merger agreement were consistent with market practice and in the best interest of Global Payments and its shareholders.

 

   

that holders of Global Payments as of immediately prior to the completion of the merger will hold, in the aggregate, approximately fifty-two percent (52%) of the fully diluted shares of the combined company immediately following the completion of the merger;

 

   

its understanding of the current and prospective environment in which Global Payments and TSYS operate, including national, international and local economic conditions and recent merger and acquisition activity in the industries in which Global Payments and TSYS operate, and the likely effect of these factors on Global Payments both with and without the merger;

 

   

historical information concerning each of Global Payments’ and TSYS’ respective business, financial condition, results of operations, earnings, trading prices, technology positions, management, competitive positions and prospects on a stand-alone basis and on a forecasted combined basis;

 

   

its review and discussions with Global Payments management concerning the due diligence examination of the operations, financial condition and prospects of TSYS;

 

   

that the combined company is anticipated to have a capital structure, balance sheet and capital allocation policy consistent with investment-grade debt ratings;

 

   

the effect of the merger on customers and employees of Global Payments;

 

   

the alternatives reasonably available to Global Payments, including an acquisition of or merger with another company or continuation on a stand-alone basis, and the potential value to Global Payments that might result from such alternatives, including the timing and likelihood of accomplishing and

 

71


Table of Contents
 

creating value in such alternatives, and the assessment of the Global Payments board of directors that none of these alternatives was reasonably likely to result in greater value for Global Payments than the merger;

 

   

its review with its outside legal advisor, Wachtell, Lipton, Rosen & Katz, of the terms of the merger agreement, including the tax treatment, deal protection and termination provisions;

 

   

the written opinions of each of BofA Merrill Lynch and J.P. Morgan, Global Payments’ financial advisors, to the Global Payments board of directors, to the effect that, as of May 27, 2019, based on and subject to the assumptions, qualifications, limitations and other matters set forth therein, the exchange ratio was fair, from a financial point of view, to Global Payments, as more fully described below in the section entitled “—Opinions of Global Payments’ Financial Advisors”;

 

   

the fact that the merger is intended to qualify as a reorganization for U.S. federal income tax purposes;

 

   

the fact that Global Payments obtained committed financing to potentially refinance certain indebtedness and pay other expenses in connection with the transaction; and

 

   

the likelihood that the merger would be completed, including after consideration of the risks related to certain conditions and regulatory approvals which will be required to complete the transactions contemplated by the merger agreement.

The Global Payments board of directors also considered the potential risks and negative factors related to the merger but concluded that the anticipated benefits of the merger were likely to substantially outweigh these risks. These potential risks and negative factors included:

 

   

the possibility of encountering difficulties in achieving anticipated synergies and savings in the amounts estimated or in the time frame contemplated;

 

   

the possibility of encountering difficulties in successfully integrating TSYS’ business, operations and workforce with those of Global Payments;

 

   

the risk of losing key Global Payments or TSYS employees during the pendency of the merger and thereafter;

 

   

certain anticipated merger-related costs;

 

   

the risk that the requisite regulatory approvals or the requisite approval of the TSYS shareholders might not be obtained and, as a result, the merger may not be completed;

 

   

the risk that governmental entities may impose requirements on the combined company that may adversely affect the ability of the combined company to realize some of the expected benefits of the merger;

 

   

the diversion of management attention and resources from the operation of Global Payments’ business towards the completion of the merger;

 

   

the fact that certain provisions of the merger agreement, although reciprocal, may have the effect of discouraging proposals for alternative transactions involving Global Payments, including: (i) the restriction on Global Payments’ ability to solicit proposals for alternative transactions; (ii) the requirement that the Global Payments board of directors submit the merger agreement to the Global Payments shareholders for approval in certain circumstances, even if it withdraws its recommendation for the merger; and (iii) the requirement that Global Payments pay a termination fee of $860 million to TSYS in certain circumstances following the termination of the merger agreement;

 

   

the terms of the merger agreement that restrict Global Payments’ ability to operate its business outside of the ordinary course before the closing of the merger;

 

   

the risk that, if TSYS pays Global Payments the $860 million termination fee pursuant to the merger agreement in certain circumstances following the termination of the merger agreement, such fee does

 

72


Table of Contents
 

not sufficiently compensate Global Payments for adverse effects arising out of the termination of the merger agreement;

 

   

the fees and costs associated with completing the merger; and

 

   

the risks of the type and nature described under the sections entitled “Risk Factors” and “Cautionary Statement Regarding Forward-Looking Statements” beginning on pages [    ] and [    ], respectively.

The Global Payments board of directors considered all of the factors and concluded that the uncertainties, risks and potential negative factors relevant to the merger were outweighed by the potential benefits that it expected would be achieved as a result of the merger.

This discussion of the information and factors considered by the Global Payments board of directors includes the principal positive and negative factors considered by the Global Payments board of directors, but is not intended to be exhaustive and may not include all of the factors considered by the Global Payments board of directors. In view of the wide variety of factors considered in connection with its evaluation of the merger, and the complexity of these matters, the Global Payments board of directors did not find it useful to and did not attempt to quantify, rank or otherwise assign relative or specific weights to the various factors that it considered in reaching its determination to adopt and approve the merger agreement, the merger and the other transactions contemplated by the merger agreement. Rather, the Global Payments board of directors viewed its determination and recommendation as being based on the totality of the information presented to it and the factors it considered. In addition, individual members of the Global Payments board of directors may have given differing weights to different factors. It should be noted that this explanation of the reasoning of the Global Payments board of directors and certain information presented in this section is forward-looking in nature and, therefore, that information should be read in light of the factors discussed in the section entitled “Cautionary Statement Regarding Forward-Looking Statements” beginning on page [    ].

In considering the recommendation of the Global Payments board of directors, you should be aware that certain directors and executive officers of Global Payments may have interests in the merger that are different from, or in addition to, interests of shareholders of Global Payments generally and may create potential conflicts of interest. The Global Payments board of directors was aware of these interests and considered them when evaluating and negotiating the merger agreement, the merger and the other transactions contemplated by the merger agreement, and in recommending to Global Payments’ shareholders that they vote in favor of the Global Payments merger proposal. See the section entitled “The Merger—Interests of Global Payments Directors and Executive Officers in the Merger” beginning on page [    ].

For the reasons set forth above, the Global Payments board of directors unanimously recommends that the holders of Global Payments common stock vote “FOR” the Global Payments merger proposal.

Opinions of Global Payments’ Financial Advisors

Opinion of BofA Merrill Lynch

Pursuant to an engagement letter dated May 27, 2019, Global Payments retained BofA Merrill Lynch as its financial advisor in connection with the merger. BofA Merrill Lynch is an internationally recognized investment banking firm which is regularly engaged in the valuation of businesses and securities in connection with mergers and acquisitions, negotiated underwritings, secondary distributions of listed and unlisted securities, private placements and valuations for corporate and other purposes. Global Payments selected BofA Merrill Lynch to act as Global Payments’ financial advisor in connection with the merger on the basis of BofA Merrill Lynch’s experience in transactions similar to the merger, its reputation in the investment community and its familiarity with Global Payments and its business.

On May 27, 2019, at a meeting of the Global Payments board of directors held to evaluate the merger, BofA Merrill Lynch delivered to the Global Payments board of directors an oral opinion, which was confirmed by

 

73


Table of Contents

delivery of a written opinion dated as of May 27, 2019, to the effect that, as of the date of the opinion and based on and subject to various assumptions and limitations described in its opinion, the exchange ratio provided for in the merger was fair, from a financial point of view, to Global Payments.

The full text of BofA Merrill Lynch’s written opinion to the Global Payments board of directors, which describes, among other things, the assumptions made, procedures followed, factors considered and limitations on the review undertaken, is attached as Annex B to this joint proxy statement/prospectus and is incorporated by reference herein in its entirety. The following summary of BofA Merrill Lynch’s opinion is qualified in its entirety by reference to the full text of the opinion. BofA Merrill Lynch delivered its opinion to the Global Payments board of directors for the benefit and use of the Global Payments board of directors (in its capacity as such) in connection with and for purposes of its evaluation of the exchange ratio from a financial point of view. BofA Merrill Lynch’s opinion does not address any other aspect of the merger and no opinion or view was expressed as to the relative merits of the merger in comparison to other strategies or transactions that might be available to Global Payments or in which Global Payments might engage or as to the underlying business decision of Global Payments to proceed with or effect the merger. BofA Merrill Lynch’s opinion does not constitute a recommendation to any shareholder as to how to vote or act in connection with the proposed merger or any other matter.

In connection with rendering its opinion, BofA Merrill Lynch has, among other things:

 

  (i)

reviewed certain publicly available business and financial information relating to TSYS and Global Payments;

 

  (ii)

reviewed certain internal financial and operating information with respect to the business, operations and prospects of TSYS furnished to or discussed with BofA Merrill Lynch by the management of TSYS, including the financial forecasts relating to TSYS prepared by the management of TSYS as described in the section entitled “—Certain Unaudited Prospective Financial Information”, which we refer to in this “—Opinion of BofA Merrill Lynch” section as the TSYS management forecasts;

 

  (iii)

reviewed certain internal financial and operating information with respect to the business, operations and prospects of Global Payments furnished to or discussed with BofA Merrill Lynch by the management of Global Payments, including certain financial forecasts relating to Global Payments prepared by the management of Global Payments as described in “—Certain Unaudited Prospective Financial Information”, which we refer to in this “—Opinion of BofA Merrill Lynch” section as the Global Payments management forecasts;

 

  (iv)

reviewed certain estimates as to the amount and timing of cost savings and revenue enhancements anticipated by the management of Global Payments to result from the merger as described in “The Merger—Certain Unaudited Prospective Financial Information—Certain Estimated Synergies Attributable to the Merger”, which we refer to in this “—Opinion of BofA Merrill Lynch” section as the synergies;

 

  (v)

discussed the past and current business, operations, financial condition and prospects of TSYS with members of the senior managements of TSYS and Global Payments, and discussed the past and current business, operations, financial condition and prospects of Global Payments with members of senior management of Global Payments;

 

  (vi)

discussed with the management of Global Payments its assessments as to (a) TSYS’ existing and future relationships, agreements and arrangements with, and Global Payments’ ability to retain, key customers, clients, service providers and employees of TSYS and (b) the products, services and technology of TSYS, including the validity of, risks associated with, and the integration by Global Payments of, such products, services and technology;

 

  (vii)

reviewed the potential pro forma financial impact of the merger on the future financial performance of Global Payments, including the potential effect on Global Payments’ estimated earnings per share;

 

74


Table of Contents
  (viii)

reviewed the trading histories for TSYS common stock and Global Payments common stock and a comparison of such trading histories with each other and with the trading histories of other companies BofA Merrill Lynch deemed relevant;

 

  (ix)

compared certain financial and stock market information of TSYS and Global Payments with similar information of other companies BofA Merrill Lynch deemed relevant;

 

  (x)

compared certain financial terms of the merger to financial terms, to the extent publicly available, of other transactions BofA Merrill Lynch deemed relevant;

 

  (xi)

reviewed the relative financial contributions of TSYS and Global Payments to the future financial performance of the combined company on a pro forma basis;

 

  (xii)

reviewed the merger agreement; and

 

  (xiii)

performed such other analyses and studies and considered such other information and factors as BofA Merrill Lynch deemed appropriate.

In arriving at its opinion, BofA Merrill Lynch assumed and relied upon, without independent verification, the accuracy and completeness of the financial and other information and data publicly available or provided to or otherwise reviewed by or discussed with it and relied upon the assurances of the managements of Global Payments and TSYS that they were not aware of any facts or circumstances that would make such information or data inaccurate or misleading in any material respect. With respect to the TSYS management forecasts, BofA Merrill Lynch was advised by TSYS, and assumed, with the consent of Global Payments, that they were reasonably prepared on bases reflecting the best currently available estimates and good faith judgments of the management of TSYS as to the future financial performance of TSYS, and accordingly BofA Merrill Lynch relied, at the direction of Global Payments, on the TSYS management forecasts for purposes of its opinion. With respect to the Global Payments management forecasts and the synergies, BofA Merrill Lynch assumed, at the direction of Global Payments, that they were reasonably prepared on bases reflecting the best currently available estimates and good faith judgments of the management of Global Payments as to the future financial performance of Global Payments and the other matters covered thereby. BofA Merrill Lynch relied, at the direction of Global Payments, on the assessments of the management of Global Payments as to Global Payments’ ability to achieve the synergies and was advised by Global Payments, and assumed, that the synergies would be realized in the amounts and at the times projected. BofA Merrill Lynch did not make and was not provided with any independent evaluation or appraisal of the assets or liabilities (contingent or otherwise) of TSYS or Global Payments, nor did it make any physical inspection of the properties or assets of TSYS or Global Payments. BofA Merrill Lynch did not evaluate the solvency or fair value of TSYS or Global Payments under any state, federal or other laws relating to bankruptcy, insolvency or similar matters. BofA Merrill Lynch relied, at the direction of Global Payments, on the assessments of the management of Global Payments as to TSYS’ existing and future relationships, agreements and arrangements with, and Global Payments’ ability to retain, key customers, clients, service providers and employees of TSYS and assumed, at the direction of Global Payments, that the merger will not adversely impact TSYS’ relationships, agreements or arrangements with such customers, clients, service providers and employees in any respect material to its analyses or opinion. BofA Merrill Lynch also relied, at the direction of Global Payments, on the assessments of the management of Global Payments as to the products, services and technology of TSYS, including the validity of, risks associated with, and the integration by Global Payments of, such products, services and technology. BofA Merrill Lynch assumed, at the direction of Global Payments, that the merger will be consummated in accordance with its terms, without waiver, modification or amendment of any material term, condition or agreement and that, in the course of obtaining the necessary governmental, regulatory and other approvals, consents, releases and waivers for the merger, no delay, limitation, restriction or condition, including any divestiture requirements or amendments or modifications, would be imposed that would have an adverse effect on TSYS, Global Payments or the contemplated benefits of the merger, in each case, in any respect material to its analyses or opinion. BofA Merrill Lynch also assumed, at the direction of Global Payments, that the merger will qualify for federal income tax purposes as a reorganization under the provisions of Section 368(a) of the Internal Revenue Code of 1986, as amended.

 

75


Table of Contents

BofA Merrill Lynch expressed no opinion or view as to any terms or other aspects of the merger (other than the exchange ratio to the extent expressly specified in its opinion), including, without limitation, the form or structure of the merger. BofA Merrill Lynch’s opinion was limited to the fairness, from a financial point of view, to Global Payments of the exchange ratio and no opinion or view was expressed with respect to any consideration received in connection with the merger by the holders of any other class of securities, creditors or other constituencies of any party. In addition, no opinion or view was expressed with respect to the fairness (financial or otherwise) of the amount, nature or any other aspect of any compensation to any of the officers, directors or employees of any party to the merger, or class of such persons, relative to the exchange ratio. Furthermore, no opinion or view was expressed as to the relative merits of the merger in comparison to other strategies or transactions that might be available to Global Payments or in which Global Payments might engage or as to the underlying business decision of Global Payments to proceed with or effect the merger. BofA Merrill Lynch did not express any opinion as to what the value of Global Payments common stock actually would be when issued or the prices at which Global Payments common stock or TSYS common stock would trade at any time, including following announcement or consummation of the merger. In addition, BofA Merrill Lynch expressed no opinion or recommendation as to how any shareholder should vote or act in connection with the merger or any related matter.

BofA Merrill Lynch’s opinion was necessarily based on financial, economic, monetary, market and other conditions and circumstances as in effect on, and the information made available to BofA Merrill Lynch as of, the date of its opinion. It should be understood that subsequent developments may affect its opinion, and BofA Merrill Lynch does not have any obligation to update, revise or reaffirm its opinion. The issuance of BofA Merrill Lynch’s opinion was approved by a fairness opinion review committee of BofA Merrill Lynch. Except as described in this summary, Global Payments imposed no other limitations on the investigations made or procedures followed by BofA Merrill Lynch in rendering its opinion.

The discussion set forth below in the sections entitled “Summary of Material TSYS Financial Analyses”, “Summary of Material Global Payments Financial Analyses” and “Summary of Material Relative Financial Analyses” represents a brief summary of the material financial analyses presented by BofA Merrill Lynch to the Global Payments board of directors in connection with its opinion. The financial analyses summarized below include information presented in tabular format. In order to fully understand the financial analyses performed by BofA Merrill Lynch, the tables must be read together with the text of each summary. The tables alone do not constitute a complete description of the financial analyses performed by BofA Merrill Lynch. Considering the data set forth in the tables below without considering the full narrative description of the financial analyses, including the methodologies and assumptions underlying the analyses, could create a misleading or incomplete view of the financial analyses performed by BofA Merrill Lynch.

Summary of Material TSYS Financial Analyses.

Selected Publicly Traded Companies Analysis. BofA Merrill Lynch reviewed publicly available financial and stock market information for TSYS and the following six (6) publicly traded companies in the payments and payment processing industry:

 

   

Fidelity National Information Services, Inc.

 

   

Fiserv, Inc.

 

   

Worldpay, Inc.

 

   

Global Payments Inc.

 

   

Jack Henry & Associates, Inc.

 

   

EVO Payments, Inc.

 

76


Table of Contents

BofA Merrill Lynch additionally reviewed publicly available financial and stock market information for the following two (2) publicly traded companies in the global payments industry:

 

   

Visa Inc.

 

   

Mastercard Incorporated

BofA Merrill Lynch reviewed, among other things, the equity values, based on closing stock prices of the selected publicly traded companies as of May 24, 2019 (the last trading day prior to the public announcement of the merger) with respect to Fidelity National Information Services, Inc., Fiserv, Inc., Jack Henry & Associates, Inc., EVO Payments, Inc., Visa Inc., and Mastercard Incorporated, as of May 23, 2019 (the last trading day prior to public reports that Global Payments Inc. and TSYS may be considering a transaction) with respect to Global Payments Inc. and as of March 15, 2019 (the last trading day prior to the public announcement of a transaction with Fidelity National Information Services, Inc.) with respect to Worldpay, Inc., in each case as a multiple of calendar year 2019 and calendar year 2020 estimated earnings per share (adjusted by excluding acquisition-related intangible amortization expenses, stock-based compensation and one-time charges, net of tax benefit related to such items), which we refer to in this “—Summary of Material TSYS Financial Analyses” section as adjusted EPS. The overall low to high calendar year 2019 estimated adjusted EPS multiples observed for selected publicly traded companies were 17.6x to 50.5x (with a mean of 28.6x and a median of 26.4x), and the overall low to high calendar year 2020 estimated adjusted EPS multiples observed for the selected publicly traded companies were 16.0x to 39.6x (with a mean of 24.4x and a median of 22.7x). BofA Merrill Lynch also reviewed enterprise values of the selected publicly traded companies, calculated as equity values based on closing stock prices as of May 24, 2019 with respect to Fidelity National Information Services, Inc., Fiserv, Inc., Jack Henry & Associates, Inc., EVO Payments, Inc., Visa Inc., and Mastercard Incorporated, as of May 23, 2019 with respect to Global Payments Inc. and as of March 15, 2019 with respect to Worldpay, Inc., plus debt and less cash, in each case as a multiple of calendar year 2019 and calendar year 2020 estimated EBITDA (adjusted by excluding stock-based compensation expense and one-time charges), which we refer to in this “—Summary of Material TSYS Financial Analyses” section as adjusted EBITDA. The overall low to high calendar year 2019 adjusted EBITDA multiples observed for selected publicly traded companies were 13.7x to 24.7x (with a mean of 18.6x and a median of 18.3x), and the overall low to high calendar year 2020 adjusted EBITDA multiples observed for selected publicly traded companies were 12.8x to 21.4x (with a mean of 16.7x and a median of 16.2x). Results of this analysis were presented for the selected companies, as indicated in the following table:

 

Company

   2019E
EV/Adj.
EBITDA
     2020E
EV/Adj.
EBITDA
     2019E
P/Adj. EPS
     2020E
P/Adj. EPS
 

Fidelity National Information Services, Inc.

     16.1x        14.8x        20.8x        18.4x  

Fiserv, Inc.

     13.7x        12.8x        17.6x        16.0x  

Worldpay, Inc.

     17.8x        15.8x        21.2x        18.1x  

Global Payments, Inc.

     17.3x        15.5x        24.5x        21.0x  

Jack Henry & Associates, Inc.

     19.4x        17.7x        33.7x        30.3x  

EVO Payments, Inc.

     18.8x        16.6x        50.5x        39.6x  

Visa Inc.

     21.4x        19.0x        28.3x        24.4x  

Mastercard Incorporated

     24.7x        21.4x        32.3x        27.4x  

BofA Merrill Lynch then applied calendar year 2019 adjusted EPS multiples of 20.0x to 24.0x, which were selected based on the above analysis and on BofA Merrill Lynch’s professional judgment and experience, to TSYS’ calendar year 2019 estimated adjusted EPS of $4.83, and applied calendar year 2020 adjusted EPS multiples of 17.5x to 21.0x, which were selected based on the above analysis and on BofA Merrill Lynch’s professional judgment and experience, to TSYS’ calendar year 2020 estimated adjusted EPS of $5.48. BofA Merrill Lynch also applied calendar year 2019 adjusted EBITDA multiples of 14.0x to 17.0x, which were selected based on the above analysis and on BofA Merrill Lynch’s professional judgment and experience, to TSYS’ calendar year 2019 estimated adjusted EBITDA of $1,482 million, and applied calendar year 2020 adjusted EBITDA multiples of 13.0x to 15.5x, which were selected based on the above analysis and on BofA

 

77


Table of Contents

Merrill Lynch’s professional judgment and experience, to TSYS’ calendar year 2020 estimated adjusted EBITDA of $1,619 million. Estimated financial data of the selected publicly traded companies were based on publicly available research analysts’ estimates, and estimated financial data of TSYS were based on the TSYS management forecasts. These analyses indicated the following approximate implied per share equity value reference ranges for TSYS (rounded to the nearest $0.25), as compared to the per share price of TSYS common stock implied by the exchange ratio:

 

     Implied Per Share Equity Value
Reference Ranges for TSYS
        Per Share Price
Implied by
Exchange Ratio

2019E P/Adj. EPS

   2020E P/Adj. EPS    2019E EV/Adj.
EBITDA
   2020E EV/Adj.
EBITDA
    

$96.50–$116.00

   $96.00–$115.25    $96.00–$120.75    $97.75–$120.00    $119.86

No company used in this analysis is identical or directly comparable to TSYS. Accordingly, an evaluation of the results of this analysis is not entirely mathematical. Rather, this analysis involves complex considerations and judgments concerning differences in financial and operating characteristics and other factors that could affect the public trading or other values of the companies to which TSYS was compared.

Selected Transaction Multiples Analysis. BofA Merrill Lynch reviewed, to the extent publicly available, financial information relating to thirteen (13) selected transactions involving companies in the payments and payment processing industries. BofA Merrill Lynch reviewed transaction values, calculated as the enterprise value implied for the target company based on the consideration payable in the selected transaction, as a multiple of the target company’s estimated adjusted EBITDA, for the twelve (12) months preceding the announcement date of the relevant transaction, which we refer to as LTM adjusted EBITDA, and (except with respect to the Vantiv, Inc./Mercury Payment Systems Inc. transaction, for which such data was not available) for the twelve (12) months following the announcement date of the relevant transaction, which we refer to as NTM adjusted EBITDA. Results of this analysis are presented in the following table:

 

Announcement Date

   Acquirer    Target    LTM
EV/Adj.
EBITDA
   NTM
EV/Adj.
EBITDA

03/18/19

   Fidelity National Information
Services, Inc.
   Worldpay, Inc.    22.9x    20.3x

01/16/19

   Fiserv, Inc.    First Data Corporation    13.1x    12.5x

01/16/18

   Silver Lake & P2 Capital Partners    Blackhawk Network Holdings, Inc.    17.2x    12.0x

09/25/17

   Hellman & Friedman LLC    Nets A/S    14.3x    13.4x

08/04/17

   The Blackstone Group L.P.    Paysafe Group plc    12.5x    11.4x

07/04/17

   Vantiv, Inc.    Worldpay Group plc    18.3x    17.1x

05/29/17

   First Data Corporation    CardConnect Corp.    19.8x    16.0x

01/26/16

   Total System Services, Inc.    TransFirst, Inc.    16.1x    13.8x

12/15/15

   Global Payments, Inc.    Heartland Payment Systems, Inc.    18.8x    16.2x

10/13/14

   Vista Equity Partners    TransFirst, Inc.    12.6x    10.6x

05/12/14

   Vantiv, Inc.    Mercury Payment Systems LLC    17.8x    N/A

02/19/13

   Total System Services, Inc.    NetSpend Holdings, Inc.    14.8x    11.6x

04/02/07

   Kohlberg Kravis Roberts & Co.    First Data Corporation    13.8x    13.0x

The overall low to high estimated LTM adjusted EBITDA multiples for the selected transactions were 12.5x to 22.9x (with a mean of 16.3x and a median of 16.1x) and the overall low to high estimated NTM adjusted EBITDA multiples for the selected transactions were 10.6x to 20.3x (with a mean of 14.0x and a median of 13.2x), respectively. BofA Merrill Lynch then applied LTM adjusted EBITDA multiples of 15.0x to 19.0x, and NTM adjusted EBITDA multiples of 13.0x to 17.0x, which in each case were selected based on the above analysis and on BofA Merrill Lynch’s professional judgment and experience, to, respectively, the estimated LTM adjusted EBITDA for TSYS as of March 31, 2019 of $1,397 million and the estimated NTM adjusted EBITDA

 

78


Table of Contents

for TSYS as of March 31, 2019 of $1,518 million, in each case, to calculate indicative enterprise values, from which BofA Merrill Lynch then subtracted net debt as of April 30, 2019 of $3,536 million to derive indicative equity values. Estimated financial data of the selected transactions were based on publicly available information. Estimated financial data of TSYS were based on the TSYS management forecasts. These analyses indicated the following approximate implied per share equity value reference ranges for TSYS (rounded to the nearest $0.25), as compared to the per share price of TSYS common stock implied by the exchange ratio:

 

Implied Per Share Equity Value Reference Ranges for TSYS

  Per Share Price Implied by Exchange Ratio

LTM EV/Adj. EBITDA

  NTM EV/Adj. EBITDA    

$97.25 - $128.25

  $90.50 - $124.00   $119.86

For purposes of this analysis, BofA Merrill Lynch selected the transactions that BofA Merrill Lynch considered most relevant to its analysis due to the similarity of their participants, size and other factors and identified a number of transactions that were, in its judgment, sufficient to permit BofA Merrill Lynch to conduct its analysis; BofA Merrill Lynch did not, however, attempt to identify all transactions that may be similar to the merger. No company, business or transaction used in this analysis is identical or directly comparable to TSYS or the merger. Accordingly, an evaluation of the results of this analysis is not entirely mathematical. Rather, this analysis involves complex considerations and judgments concerning differences in financial and operating characteristics and other factors that could affect the acquisition or other values of the companies, business segments or transactions to which TSYS and the merger were compared.

Discounted Cash Flow Analysis. BofA Merrill Lynch performed a discounted cash flow analysis of TSYS to calculate the estimated present value of the stand-alone unlevered, after-tax free cash flows that TSYS was forecasted to generate from March 31, 2019 through fiscal year 2024 based on the TSYS management forecasts. BofA Merrill Lynch calculated terminal values for TSYS by extrapolating TSYS’ normalized unlevered free cash flow at perpetuity growth rates of 2.75% to 3.25%, which perpetuity growth rates were selected based on BofA Merrill Lynch’s professional judgment and experience. The cash flows and terminal values were then discounted to present value as of March 31, 2019, assuming a mid-year convention, using discount rates ranging from 7.0% to 9.0%, which were based on an estimate of TSYS’ weighted average cost of capital, derived using the capital asset pricing model and BofA Merrill Lynch’s professional judgment and experience. From the resulting enterprise values, BofA Merrill Lynch deducted net debt as of March 31, 2019 of $3,549 million to derive equity values. This analysis indicated the following approximate implied per share equity value reference ranges for TSYS (rounded to the nearest $0.25) as compared to the per share price of TSYS common stock implied by the exchange ratio:

 

Implied Per Share Equity Value

Reference Range for TSYS

  

Per Share Price Implied by Exchange  Ratio

$92.75 - $164.00

   $119.86

Summary of Material Global Payments Financial Analyses.

Selected Publicly Traded Companies Analysis. BofA Merrill Lynch reviewed publicly available financial and stock market information for Global Payments and the following five (5) publicly traded companies in the payments and payment processing industry:

 

   

Fidelity National Information Services, Inc.

 

   

Fiserv, Inc.

 

   

Worldpay, Inc.

 

   

Total System Services, Inc.

 

   

EVO Payments, Inc.

 

79


Table of Contents

BofA Merrill Lynch additionally reviewed publicly available financial and stock market information for the following two publicly traded companies in the global payments industry:

 

   

Visa Inc.

 

   

Mastercard Incorporated

BofA Merrill Lynch reviewed, among other things, the equity values, based on the closing stock prices of the selected publicly traded companies as of May 24, 2019 (the last trading day prior to the public announcement of the merger) with respect to Fidelity National Information Services, Inc., Fiserv, Inc., EVO Payments, Inc., Visa Inc., and Mastercard Incorporated, as of May 23, 2019 (the last trading day prior to public reports that Total System Services, Inc. and Global Payments may be considering a transaction) with respect to Total System Services, Inc. and as of March 15, 2019 (the last trading day prior to the public announcement of a transaction with Fidelity National Information Services, Inc.) with respect to Worldpay, Inc., in each case as a multiple of calendar year 2019 and calendar year 2020 estimated earnings per share (adjusted by excluding acquisition-related intangible amortization expenses, stock-based compensation and one-time charges, net of tax benefit related to such items), which we refer to in this “—Summary of Material Global Payments Financial Analyses” section as adjusted EPS. The overall low to high calendar year 2019 estimated adjusted EPS multiples observed for selected publicly traded companies were 17.6x to 50.5x (with a mean of 27.3x and a median of 21.2x), and the overall low to high calendar year 2020 estimated adjusted EPS multiples observed for selected publicly traded companies were 16.0x to 39.6x (with a mean of 23.1x and a median of 18.4x). BofA Merrill Lynch also reviewed enterprise values of the selected publicly traded companies, calculated as equity values based on closing stock prices as of May 24, 2019 with respect to Fidelity National Information Services, Inc., Fiserv, Inc., EVO Payments, Inc., Visa Inc., and Mastercard Incorporated, as of May 23, 2019 with respect to Total System Services, Inc. and as of March 15, 2019 with respect to Worldpay, Inc., plus debt and less cash, in each case as a multiple of calendar year 2019 and calendar year 2020 estimated EBITDA (adjusted by excluding stock-based compensation expense and one-time charges), which we refer to in this “—Summary of Material Global Payments Financial Analyses” section as adjusted EBITDA. The overall low to high calendar year 2019 adjusted EBITDA multiples observed for selected publicly traded companies were 13.7x to 24.7x (with a mean of 18.1x and a median of 17.8x), and the overall low to high calendar year 2020 adjusted EBITDA multiples observed for selected publicly traded companies were 12.8x to 21.4x (with a mean of 16.2x and a median of 15.8x). Results of this analysis were presented for the selected companies, as indicated in the following table:

 

Company

   2019E
EV/Adj.
EBITDA
     2020E
EV/Adj.
EBITDA
     2019E
P/Adj.
EPS
     2020E
P/Adj.
EPS
 

Fidelity National Information Services, Inc.

     16.1x        14.8x        20.8x        18.4x  

Fiserv, Inc.

     13.7x        12.8x        17.6x        16.0x  

Worldpay, Inc.

     17.8x        15.8x        21.2x        18.1x  

Total System Services, Inc.

     14.5x        13.3x        20.4x        17.9x  

EVO Payments, Inc.

     18.8x        16.6x        50.5x        39.6x  

Visa Inc.

     21.4x        19.0x        28.3x        24.4x  

Mastercard Incorporated

     24.7x        21.4x        32.3x        27.4x  

BofA Merrill Lynch then applied calendar year 2019 adjusted EPS multiples of 21.0x to 25.5x, which were selected based on the above analysis and on BofA Merrill Lynch’s professional judgment and experience, to Global Payments’ calendar year 2019 estimated adjusted EPS of $5.89, and applied calendar year 2020 adjusted EPS multiples of 18.0x to 21.5x, which were selected based on the above analysis and on BofA Merrill Lynch’s professional judgment and experience, to Global Payments’ calendar year 2020 estimated adjusted EPS of $6.90. BofA Merrill Lynch also applied calendar year 2019 adjusted EBITDA multiples of 16.0x to 18.0x, which were selected based on the above analysis and on BofA Merrill Lynch’s professional judgment and experience, to Global Payments’ calendar year 2019 estimated EBITDA (adjusted by excluding stock-based compensation and one-time charges) of $1,697 million, and applied calendar year 2020 adjusted EBITDA multiples of 14.0x to 16.0x, which were selected based on the above analysis and on BofA Merrill Lynch’s professional judgment and

 

80


Table of Contents

experience, to Global Payments’ calendar year 2020 estimated EBITDA (adjusted by excluding stock-based compensation and one-time charges) of $1,892 million. Estimated financial data of the selected publicly traded companies were based on publicly available research analysts’ estimates, and estimated financial data of Global Payments were based on the Global Payments management forecasts. These analyses indicated the following approximate implied per share equity value reference ranges for Global Payments (rounded to the nearest $0.25) as compared to the closing price of Global Payments common stock on May 23, 2019:

 

Implied Per Share Equity Value Reference Ranges for Global Payments    Closing Trading Price
of Global Payments
Common Stock on

May 23, 2019
2019E P/Adj. EPS    2020E P/Adj. EPS    2019E EV/Adj.
EBITDA
   2020E EV/Adj.
EBITDA
    
$123.75–$150.25    $124.25–$148.50    $140.50–$162.00    $136.25–$160.25    $147.96

No company used in this analysis is identical or directly comparable to Global Payments. Accordingly, an evaluation of the results of this analysis is not entirely mathematical. Rather, this analysis involves complex considerations and judgments concerning differences in financial and operating characteristics and other factors that could affect the public trading or other values of the companies to which Global Payments was compared.

Discounted Cash Flow Analysis. BofA Merrill Lynch performed a discounted cash flow analysis of Global Payments to calculate the estimated present value of the stand-alone unlevered, after-tax free cash flows that Global Payments was forecasted to generate from March 31, 2019 through fiscal year 2023 based on the Global Payments management forecasts. BofA Merrill Lynch calculated terminal values for Global Payments by extrapolating Global Payments’ normalized unlevered free cash flow at perpetuity growth rates of 3.00% to 3.50%, which perpetuity growth rates were selected based on BofA Merrill Lynch’s professional judgment and experience. The cash flows and terminal values were then discounted to present value as of March 31, 2019, assuming a mid-year convention, using discount rates ranging from 7.50% to 9.50%, which were based on an estimate of Global Payments’ weighted average cost of capital, derived using the capital asset pricing model and BofA Merrill Lynch’s professional judgment and experience. From the resulting enterprise values, BofA Merrill Lynch deducted net debt as of March 31, 2019 of $5,041 million to derive equity values. This analysis indicated the following approximate implied per share equity value reference ranges for Global Payments (rounded to the nearest $0.25) as compared to the closing price of Global Payments common stock on May 23, 2019:

 

Implied Per Share Equity Value

Reference Range for Global Payments

   Closing Trading Price of Global Payments
Common Stock on May 23, 2019

$130.75–$228.00

   $147.96

Summary of Material Relative Financial Analyses.

Implied Exchange Ratio Analyses. Utilizing the implied per share equity value reference ranges derived for TSYS and Global Payments described above by dividing the low endpoint and the high endpoint of the per share equity reference range derived for TSYS by the high endpoint and the low endpoint of the per share equity reference range derived for Global Payments, respectively, without taking into account the potential pro forma financial effect of cost savings, BofA Merrill Lynch calculated the following approximate implied exchange ratio reference ranges, as compared to the exchange ratio provided for in the merger:

 

Implied Exchange Ratio
Reference Ranges
   Discounted Cash
Flow
     Merger Exchange
Ratio
 
2019E P/Adj.
EPS
   2020E P/Adj.
EPS
   2019E EV/Adj.
EBITDA
   2019E EV/Adj.
EBITDA
             
0.6423x–0.9374x    0.6465x–0.9276x    0.5926x–0.8594x    0.6100x–0.8807x      0.4068x–1.2543x        0.8101x  

Has/Gets Analysis. BofA Merrill Lynch performed a has/gets analysis to calculate the theoretical change in value for Global Payments shareholders resulting from the merger based on a comparison of (i) the pro forma

 

81


Table of Contents

ownership by Global Payments shareholders of the combined company following the merger, and (ii) the 100% ownership by Global Payments shareholders of the Global Payments common stock on a stand-alone basis. For Global Payments on a stand-alone basis, BofA Merrill Lynch used the reference range obtained in its discounted cash flow analysis described above under “—Summary of Material Global Payments Financial Analyses—Discounted Cash Flow Analysis.” BofA Merrill Lynch then performed the same analysis with respect to the combined company on a pro forma basis, taking into account the synergies and other pro forma effects of the merger. For the pro forma analysis, BofA Merrill Lynch used, as applicable, the same ranges of perpetuity growth rates and discount rates as it had used for its analyses of Global Payments and TSYS on a stand-alone basis. This analysis yielded the following implied per share equity value reference ranges for Global Payments common stock on a stand-alone basis and for the combined company:

 

     Per Share Equity Value Reference
Ranges for Global

Payments Common Stock
 

Stand-Alone

   $ 130.75–$228.00  

Pro Forma

   $ 134.35–$236.65  

Other Factors.    BofA Merrill Lynch also noted certain additional factors that were not considered part of BofA Merrill Lynch’s material financial analyses with respect to its opinion but were presented for reference purposes only, including, among other things, the following:

 

   

BofA Merrill Lynch reviewed the potential pro forma financial effect of the merger on Global Payments’ calendar years 2020 through 2022 estimated adjusted EPS, taking into account the synergies and other pro forma effects of the merger, which indicated, based on the exchange ratio and the relative pro forma ownership of the combined company following the merger, that the merger could be accretive to Global Payments’ estimated adjusted EPS for calendar years 2020 through 2022. Estimated financial data of Global Payments were based on the Global Payments management forecasts, estimated financial data of TSYS were based on the TSYS management forecasts, and the pro forma effects of the merger were based on information provided by Global Payments management, including the synergies. The actual results achieved by the combined company may vary from projected results and the variations may be material.

 

   

BofA Merrill Lynch reviewed the implied per share equity value reference ranges derived for TSYS and Global Payments from the price per share of TSYS common stock and the price per share of Global Payments common stock, respectively, for each day of the 52-week period ending May 23, 2019, which reference ranges were used to calculate a range of implied exchange ratios of 0.6638x to 0.8330x, as compared to the exchange ratio provided for in the merger of 0.8101x.

 

   

BofA Merrill Lynch reviewed the historical closing prices of TSYS common stock during the one-year period ended May 23, 2019, which ranged from $75.58 to $102.67, as compared to the closing price per share of TSYS common stock of $99.62 on May 23, 2019 and an implied price of $119.86 based on the exchange ratio; and the historical closing prices of Global Payments common stock during the one-year period ended May 23, 2019, which ranged from $94.81 to $152.24, as compared to the closing price per share of Global Payments common stock of $147.96 on May 23, 2019.

 

   

BofA Merrill Lynch reviewed the publicly available financial analyst perspectives on (i) TSYS, which generally indicated low to high price targets of TSYS common stock of approximately $92.00 to $120.00 and (ii) Global Payments, which generally indicated low to high price targets of Global Payments common stock of approximately $105.00 to $182.00.

Miscellaneous.

As noted above, the discussion set forth above in the sections entitled “—Summary of Material TSYS Financial Analyses,” “—Summary of Material Global Payments Financial Analyses” and “—Summary of Material Relative Financial Analyses” is a summary of the material financial analyses presented by BofA Merrill Lynch to

 

82


Table of Contents

the Global Payments board of directors in connection with its opinion and is not a comprehensive description of all analyses undertaken or factors considered by BofA Merrill Lynch in connection with its opinion. The preparation of a financial opinion is a complex analytical process involving various determinations as to the most appropriate and relevant methods of financial analysis and the application of those methods to the particular circumstances and, therefore, a financial opinion is not readily susceptible to partial analysis or summary description. BofA Merrill Lynch believes that its analyses summarized above must be considered as a whole. BofA Merrill Lynch further believes that selecting portions of its analyses and the factors considered or focusing on information presented in tabular format, without considering all analyses and factors or the narrative description of the analyses, could create a misleading or incomplete view of the processes underlying BofA Merrill Lynch’s analyses and opinion. The fact that any specific analysis has been referred to in the summary above is not meant to indicate that such analysis was given greater weight than any other analysis referred to in the summary.

In performing its analyses, BofA Merrill Lynch considered industry performance, general business and economic conditions and other matters, many of which are beyond the control of Global Payments and TSYS. The estimates of the future performance of Global Payments and TSYS in or underlying BofA Merrill Lynch’s analyses are not necessarily indicative of actual values or actual future results, which may be significantly more or less favorable than those estimates or those suggested by BofA Merrill Lynch’s analyses. These analyses were prepared solely as part of BofA Merrill Lynch’s analysis of the fairness, from a financial point of view, to Global Payments of the exchange ratio and were provided to the Global Payments board of directors in connection with the delivery of BofA Merrill Lynch’s opinion. The analyses do not purport to be appraisals or to reflect the prices at which a company might actually be sold or the prices at which any securities have traded or may trade at any time in the future. Accordingly, the estimates used in, and the ranges of valuations resulting from, any particular analysis described above are inherently subject to substantial uncertainty and should not be taken to be BofA Merrill Lynch’s view of the actual values of Global Payments or TSYS.

The type and amount of consideration payable in the merger was determined through negotiations between Global Payments and TSYS, rather than by any financial advisor, and was approved by the Global Payments board of directors. The decision to enter into the merger agreement was solely that of the Global Payments board of directors and TSYS’ board of directors. As described above, BofA Merrill Lynch’s opinion and analyses were only one of many factors considered by the Global Payments board of directors in its evaluation of the proposed merger and should not be viewed as determinative of the views of the Global Payments board of directors or management with respect to the merger or the exchange ratio provided for in the merger.

Global Payments has agreed to pay BofA Merrill Lynch for its services in connection with the merger an aggregate fee of $25 million, $2 million of which was payable upon the rendering of the opinion and the remainder of which is contingent upon consummation of the merger. BofA Merrill Lynch may also receive a fee from Global Payments in the event that Global Payments receives a break-up fee in connection with the termination of or other failure to consummate the merger. BofA Merrill Lynch and certain of its affiliates also are participating in the financing for the merger, for which services BofA Merrill Lynch and such affiliates will receive fees, contingent upon consummation of the merger, estimated to be approximately $14 to $17 million, and which services may include acting as an administrative agent, arranger, bookrunner, underwriter, initial purchaser, placement agent and/or lender, as applicable, in connection with new senior credit facilities or offerings of debt or equity securities of Global Payments. Global Payments also has agreed to reimburse BofA Merrill Lynch for certain expenses incurred in connection with BofA Merrill Lynch’s engagement and to indemnify BofA Merrill Lynch, any controlling person of BofA Merrill Lynch and each of their respective directors, officers, employees, agents and affiliates against specified liabilities, including liabilities under the federal securities laws.

BofA Merrill Lynch and its affiliates comprise a full service securities firm and commercial bank engaged in securities, commodities and derivatives trading, foreign exchange and other brokerage activities, and principal investing as well as providing investment, corporate and private banking, asset and investment management,

 

83


Table of Contents

financing and financial advisory services and other commercial services and products to a wide range of companies, governments and individuals. In the ordinary course of their businesses, BofA Merrill Lynch and its affiliates may invest on a principal basis or on behalf of customers or manage funds that invest, make or hold long or short positions, finance positions or trade or otherwise effect transactions in equity, debt or other securities or financial instruments (including derivatives, bank loans or other obligations) of Global Payments, TSYS and certain of their respective affiliates.

BofA Merrill Lynch and its affiliates in the past have provided, currently are providing, and in the future may provide, investment banking, commercial banking and other financial services to Global Payments and have received or in the future may receive compensation for the rendering of these services, including having acted as financial advisor to Global Payments in connection with certain acquisition transactions, having acted or acting as an administrative agent, co-lead arranger and bookrunner for, and as a lender (including a swing-line and letter of credit lender) to Global Payments in connection with certain term loans and/or credit facilities and having provided or providing certain treasury management services and products to Global Payments. From May 1, 2017 through April 30, 2019, BofA Merrill Lynch and its affiliates derived aggregate revenues from Global Payments and its affiliates of approximately $30 million for investment and corporate banking services.

In addition, BofA Merrill Lynch and its affiliates in the past have provided, currently are providing, and in the future may provide, investment banking, commercial banking and other financial services to TSYS and have received or in the future may receive compensation for the rendering of these services, including having acted as financial advisor to TSYS in connection with an acquisition transaction, having acted or acting as an administrative agent for, and as a lender (including letter of credit lender) to TSYS in connection with certain term loans and/or credit facilities, having acted as a bookrunning manager for an accelerated share repurchase and as a joint bookrunner for a capital markets transaction by TSYS and having provided or providing certain derivatives trading services and treasury management services and products to TSYS. From May 1, 2017 through April 30, 2019, BofA Merrill Lynch and its affiliates derived aggregate revenues from TSYS and its affiliates of approximately $21 million for investment and corporate banking services.

Opinion of J.P. Morgan

Pursuant to an engagement letter dated May 27, 2019, Global Payments retained J.P. Morgan as its financial advisor in connection with the merger.

At the meeting of the Global Payments board of directors on May 27, 2019, J.P. Morgan rendered its oral opinion to the Global Payments board of directors, confirmed by delivery of a written opinion dated May 27, 2019, that, as of such date and based upon and subject to the factors and assumptions set forth in its opinion, the exchange ratio was fair, from a financial point of view, to Global Payments. The full text of the written opinion of J.P. Morgan dated May 27, 2019, which sets forth the assumptions made, matters considered and limits on the review undertaken, is attached as Annex C to this joint proxy statement/prospectus and is incorporated herein by reference. The summary of the opinion of J.P. Morgan set forth in this joint proxy statement/prospectus is qualified in its entirety by reference to the full text of such opinion. Global Payments’ shareholders are urged to read the opinion in its entirety. J.P. Morgan’s written opinion was addressed to the Global Payments board of directors (in its capacity as such) in connection with and for the purposes of its evaluation of the merger, was directed only to the exchange ratio and did not address any other aspect of the merger. J.P. Morgan expressed no opinion as to the fairness of the exchange ratio to the holders of any class of securities, creditors or other constituencies of Global Payments or as to the underlying decision by Global Payments to engage in the merger. The issuance of J.P. Morgan’s opinion was approved by a fairness committee of J.P. Morgan. The summary of the opinion of J.P. Morgan set forth in this joint proxy statement/prospectus is qualified in its entirety by reference to the full text of such opinion. The opinion does not constitute a recommendation to any shareholder of Global Payments as to how such shareholder should vote with respect to the merger or any other matter.

In connection with preparing its opinion, J.P. Morgan, among other things:

 

   

reviewed the merger agreement;

 

84


Table of Contents
   

reviewed certain publicly available business and financial information concerning Global Payments and TSYS and the industries in which they operate;

 

   

compared the proposed financial terms of the merger with the publicly available financial terms of certain transactions involving companies J.P. Morgan deemed relevant and the consideration received for such companies;

 

   

compared the financial and operating performance of Global Payments and TSYS with publicly available information concerning certain other companies J.P. Morgan deemed relevant and reviewed the current and historical market prices of Global Payments common stock and TSYS common stock and certain publicly traded securities of such other companies;

 

   

reviewed certain internal financial analyses and forecasts prepared by the managements of Global Payments and TSYS relating to their respective businesses as described in “The Merger—Certain Unaudited Prospective Financial Information”, which we refer to in this “—Opinion of J.P. Morgan” section as the Global Payments management forecasts and the TSYS management forecasts, respectively, as well as the estimated amount and timing of cost savings and related expenses and synergies expected to result from the merger, as described in “The Merger—Certain Unaudited Prospective Financial Information—Certain Estimated Synergies Attributable to the Merger”, which we refer to in this “—Opinion of J.P. Morgan” section as the synergies; and

 

   

performed such other financial studies and analyses and considered such other information as J.P. Morgan deemed appropriate for the purposes of its opinion.

In addition, J.P. Morgan held discussions with certain members of the management of TSYS and Global Payments with respect to certain aspects of the merger, and the past and current business operations of TSYS and Global Payments, the financial condition and future prospects and operations of TSYS and Global Payments, the effects of the merger on the financial condition and future prospects of Global Payments, and certain other matters J.P. Morgan believed necessary or appropriate to its inquiry.

In giving its opinion, J.P. Morgan relied upon and assumed the accuracy and completeness of all information that was publicly available or was furnished to or discussed with J.P. Morgan by TSYS and Global Payments or otherwise reviewed by or for J.P. Morgan, and J.P. Morgan did not independently verify (and did not assume any obligation to undertake any such independent verification) any such information or its accuracy or completeness. J.P. Morgan did not conduct and was not provided with any valuation or appraisal of any assets or liabilities, nor did J.P. Morgan evaluate the solvency of TSYS or Global Payments under any state or federal laws relating to bankruptcy, insolvency or similar matters. In relying on financial analyses and forecasts provided to J.P. Morgan or derived therefrom, including the synergies, J.P. Morgan assumed at the direction of Global Payments with respect to the TSYS management forecasts and the Global Payments management forecasts, that such analyses and forecasts were reasonably prepared based on assumptions reflecting the best currently available estimates and judgments by management as to the expected future results of operations and financial condition of TSYS and Global Payments to which such analyses or forecasts relate. For purposes of its opinion, J.P. Morgan relied, at the direction of Global Payments, on the TSYS management forecasts and the Global Payments management forecasts and on the assessment of Global Payments management as to Global Payments’ ability to achieve the synergies, and J.P. Morgan was additionally advised by Global Payments and assumed that the synergies would be realized in the amounts and at the times projected. J.P. Morgan expressed no view as to such analyses or forecasts (including the synergies) or the assumptions on which they were based. J.P. Morgan also assumed that the merger and the other transactions contemplated by the merger agreement will qualify as a tax-free reorganization for United States federal income tax purposes, and will be consummated as described in the merger agreement. J.P. Morgan also assumed that the representations and warranties made by Global Payments and TSYS in the merger agreement and the related agreements were and will be true and correct in all respects material to its analysis. J.P. Morgan is not a legal, regulatory or tax expert and relied on the assessments made by advisors to Global Payments with respect to such issues. J.P. Morgan further assumed that all material governmental, regulatory or other consents and approvals necessary for the consummation of the merger will be

 

85


Table of Contents

obtained without any adverse effect on TSYS or Global Payments or on the contemplated benefits of the merger in any respect material to its analysis.

J.P. Morgan’s opinion was necessarily based on economic, market and other conditions as in effect on, and the information made available to J.P. Morgan as of, the date of such opinion. J.P. Morgan’s opinion noted that subsequent developments may affect J.P. Morgan’s opinion, and that J.P. Morgan does not have any obligation to update, revise, or reaffirm such opinion. J.P. Morgan’s opinion is limited to the fairness, from a financial point of view, to Global Payments of the exchange ratio in the merger, and J.P. Morgan has expressed no opinion as to the fairness of the exchange ratio to the holders of any class of securities, creditors or other constituencies of Global Payments or as to the underlying decision by Global Payments to engage in the merger. Furthermore, J.P. Morgan expressed no opinion with respect to the amount or nature of any compensation to any officers, directors, or employees of any party to the merger, or any class of such persons relative to the exchange ratio in the merger or with respect to the fairness of any such compensation. J.P. Morgan expressed no opinion as to the price at which TSYS common stock or Global Payments common stock will trade at any future time.

The terms of the merger agreement, including the exchange ratio, were determined through arm’s length negotiations between Global Payments and TSYS, and the decision to enter into the merger agreement was solely that of the Global Payments board of directors and the TSYS board of directors. J.P. Morgan’s opinion and financial analyses were only one of the many factors considered by the Global Payments board of directors in its evaluation of the proposed merger and should not be viewed as determinative of the views of the Global Payments board of directors or management with respect to the proposed merger or the exchange ratio.

In accordance with customary investment banking practice, J.P. Morgan employed generally accepted valuation methodology in rendering its opinion to the Global Payments board of directors on May 27, 2019 and the presentation delivered to the Global Payments board of directors on such date. The following is a summary of the material financial analyses undertaken by J.P. Morgan in connection with the rendering of such opinion and presentation and does not purport to be a complete description of the analyses or data presented by J.P. Morgan. Some of the summaries of the financial analyses include information presented in tabular format. The tables are not intended to stand alone, and in order to more fully understand the financial analyses used by J.P. Morgan, the tables must be read together with the full text of each summary. Considering the data set forth below without considering the full narrative description of the financial analyses, including the methodologies and assumptions underlying the analyses, could create a misleading or incomplete view of J.P. Morgan’s analyses.

TSYS Analysis

Selected Publicly Traded Companies Analysis.

J.P. Morgan reviewed publicly available financial and stock market information for TSYS and the following seven (7) publicly traded companies in the payments and payment processing industry:

 

   

Fidelity National Information Services, Inc.

 

   

Fiserv, Inc.

 

   

Worldpay, Inc.

 

   

Global Payments Inc.

 

   

Jack Henry & Associates, Inc.

 

   

EVO Payments, Inc.

 

   

First Data Corporation

J.P. Morgan additionally reviewed publicly available financial and stock market information for the following two (2) publicly traded companies in the global payments industry:

 

   

Visa Inc.

 

   

Mastercard Incorporated

 

86


Table of Contents

None of the selected companies reviewed is identical to TSYS and certain of these companies may have characteristics that are materially different from that of TSYS. The analyses necessarily involve complex considerations and judgments concerning differences in financial and operational characteristics of the companies involved and other factors that could affect the companies differently than would affect TSYS. For each of Fidelity National Information Services, Inc., Fiserv, Inc., Jack Henry & Associates, Inc., EVO Payments, Inc., Visa, Inc. and Mastercard Incorporated, publicly available financial information was measured as of May 24, 2019 (the last trading day prior to the public announcement of the merger); for Global Payments Inc., publicly available financial information was measured as of May 23, 2019 (the last trading day prior to public reports that Global Payments Inc. and TSYS may be considering a transaction); for Worldpay, Inc., publicly available financial information was measured as of March 15, 2019 (the last trading day prior to the public announcement of a transaction with Fidelity National Information Services, Inc.); and for First Data Corporation, publicly available financial information was measured as of January 15, 2019 (the last trading day prior to the public announcement of a transaction with Fiserv, Inc.). With respect to the selected companies, the information J.P. Morgan presented included the multiple of enterprise value to estimates of calendar year 2019 and calendar year 2020 EBITDA (adjusted by excluding stock-based compensation expense and one-time charges) for the applicable company, which we refer to in this “—TSYS Analysis” section as EV/Adj. EBITDA. With respect to the selected companies, J.P. Morgan also presented information that included the multiple of share price to estimates of calendar year 2019 and calendar year 2020 earnings per share (adjusted by excluding acquisition-related intangible amortization expenses, stock-based compensation and one-time charges, net of tax benefit related to such items), which we refer to in this “—TSYS Analysis” section as P/Adj. EPS. Results of this analysis were presented for the selected companies, as indicated in the following table:

 

Company

   2019E
EV/Adj.
EBITDA
     2020E
EV/Adj.
EBITDA
     2019E
P/Adj. EPS
     2020E
P/Adj. EPS
 

Fidelity National Information Services, Inc.

     16.1x        14.8x        20.8x        18.4x  

Fiserv, Inc.

     13.7x        12.8x        17.6x        16.0x  

Worldpay, Inc.

     17.8x        15.8x        21.2x        18.1x  

Global Payments, Inc.

     17.3x        15.5x        24.5x        21.0x  

Jack Henry & Associates, Inc.

     19.4x        17.7x        33.7x        30.3x  

EVO Payments, Inc.

     18.8x        16.6x        50.5x        39.6x  

First Data Corporation

     10.7x        9.9x        11.1x        9.7x  

Visa Inc.

     21.4x        19.0x        28.3x        24.4x  

Mastercard Incorporated

     24.7x        21.4x        32.3x        27.4x  

Based on the above analysis and on J.P. Morgan’s professional judgment and experience, J.P. Morgan selected a calendar year 2019 EV/Adj. EBITDA reference range of 14.0x to 17.0x and a calendar year 2020 EV/Adj. EBITDA reference range of 13.0x to 15.5x. J.P. Morgan then applied that range to TSYS’ 2019 estimated EBITDA (adjusted by excluding stock-based compensation expense and one-time charges) of $1,482 million, and TSYS’ 2020 estimated EBITDA (adjusted by excluding stock-based compensation expense and one-time charges) of $1,619 million, to derive implied per share price ranges of TSYS common stock. The analysis indicated a range of implied equity values per share for TSYS common stock (rounded to the nearest $0.25) of approximately $96.00 to $120.75 per share for calendar year 2019, and approximately $97.75 to $120.00 for calendar year 2020, as compared to the closing price per share of TSYS common stock as of May 23, 2019 of $99.62 and an implied price of $119.86 based on the exchange ratio.

Based on the above analysis and J.P. Morgan’s professional judgment and experience, J.P. Morgan selected a calendar year 2019 P/Adj. EPS reference range of 19.5x to 21.5x and a calendar year 2020 P/Adj. EPS reference range of 17.5x to 19.0x. J.P. Morgan then applied that range to TSYS’ 2019 estimated earnings per share (adjusted by excluding the acquisition-related intangible amortization expenses, stock-based compensation and one-time charges, net of tax benefit related to such items) of $4.83, and TSYS’ 2020 estimated earnings per share (adjusted by excluding the acquisition-related intangible amortization expenses, stock-based compensation and one-time charges, net of tax benefit related to such items) of $5.48, to derive implied per share price ranges of

 

87


Table of Contents

TSYS common stock. This analysis indicated a range of implied equity values per share for TSYS common stock (rounded to the nearest $0.25) of approximately $94.25 to $103.75 per share for calendar year 2019, and approximately $96.00 to $104.25 per share for calendar year 2020, in each case, as compared to the closing price per share of TSYS common stock as of May 23, 2019 of $99.62 and an implied price of $119.86 based on the exchange ratio.

Selected Transaction Multiples Analysis.

Using publicly available information, J.P. Morgan examined thirteen (13) selected transactions in the payments and payment processing industries. For purposes of this analysis, J.P. Morgan selected the transactions that J.P. Morgan considered most relevant to its analysis due to the similarity of their participants, size and other factors and identified a number of transactions that were, in its judgment, sufficient to permit J.P. Morgan to conduct its analysis; J.P. Morgan did not, however, attempt to identify all transactions that may be similar to the merger. The table below lists each such transaction; the transaction-implied multiple of last-12-month EBITDA (adjusted by excluding stock-based compensation expense and one-time charges), which we refer to in this “—TSYS Analysis” section as LTM EV/Adj. EBITDA; and (except with respect to the Vantiv, Inc./Mercury Payment Systems Inc. transaction, for which such data was not available) the transaction-implied multiple of next-12-month EBITDA (adjusted by excluding stock-based compensation expense and one-time charges), which we refer to in this “—TSYS Analysis” section as NTM EV/Adj. EBITDA:

 

Announcement Date

  

Acquirer

  

Target

  

LTM
EV/Adj.
EBITDA

  

NTM
EV/Adj.
EBITDA

03/18/19

   Fidelity National Information Services, Inc.    Worldpay, Inc.    22.9x    20.3x

01/16/19

   Fiserv, Inc.    First Data Corporation    13.1x    12.5x

01/16/18

   Silver Lake & P2 Capital Partners    Blackhawk Network Holdings, Inc.    17.2x    12.0x

09/25/17

   Hellman & Friedman LLC    Nets A/S    14.3x    13.4x

08/04/17

   The Blackstone Group L.P.    Paysafe Group plc    12.5x    11.4x

07/04/17

   Vantiv, Inc.    Worldpay Group plc    18.3x    17.1x

05/29/17

   First Data Corporation    CardConnect Corp.    19.8x    16.0x

01/26/16

   Total System Services, Inc.    TransFirst, Inc.    16.1x    13.8x

12/15/15

   Global Payments, Inc.    Heartland Payment Systems, Inc.    18.8x    16.2x

10/13/14

   Vista Equity Partners    TransFirst, Inc.    12.6x    10.6x

05/12/14

   Vantiv, Inc.    Mercury Payment Systems LLC    17.8x    N/A

02/19/13

   Total System Services, Inc.    NetSpend Holdings, Inc.    14.8x    11.6x

04/02/07

   Kohlberg Kravis Roberts & Co.    First Data Corporation    13.8x    13.0x

Based on the above analysis and J.P. Morgan’s professional judgment and experience, J.P. Morgan selected an LTM EV/Adj. EBITDA reference range for TSYS of 15.0x to 19.0x and an NTM EV/Adj. EBITDA reference range for TSYS of 13.0x to 17.0x. J.P. Morgan then applied those ranges to TSYS’ estimated last-12-month EBITDA (adjusted by excluding stock-based compensation expense and one-time charges) of $1,397 million, and estimated next-12-month EBITDA (adjusted by excluding stock-based compensation expense and one-time charges) of $1,518 million, to derive implied per share price ranges for TSYS common stock. This analysis indicated ranges of implied equity values per share for TSYS common stock (rounded to the nearest $0.25) of $97.25 to $128.25, using the LTM EV/Adj. EBITDA reference range, and of $90.50 to $124.00, using the NTM EV/Adj. EBITDA reference range, in each case, as compared to the closing price per share of TSYS common stock as of May 23, 2019 of $99.62 and an implied price of $119.86 based on the exchange ratio.

Discounted Cash Flow Analysis

J.P. Morgan conducted a discounted cash flow analysis for the purpose of determining the fully diluted equity value per share for TSYS common stock using the financial projections described in “The Merger—Certain

 

88


Table of Contents

Unaudited Prospective Financial Information”. A discounted cash flow analysis is a method of evaluating an asset using estimates of the future unlevered free cash flows generated by the asset and taking into consideration the risk of generating such future cash flows and the time value of money with respect to such future cash flows to calculate their present value. Unlevered free cash flow refers to a calculation of the future cash flows of an asset without including in such calculation any debt servicing costs. Present value refers to the current value of the future cash flows generated by an asset and is obtained by discounting those future cash flows back to the present using an appropriate discount rate. Terminal value refers to the capitalized value of all cash flows generated from an asset for periods beyond the projection period.

J.P. Morgan calculated the unlevered free cash flows that TSYS is expected to generate during calendar years 2019 through 2024 based upon the financial projections described in “The Merger—Certain Unaudited Prospective Financial Information”. J.P. Morgan also calculated a range of terminal asset values of TSYS at the end of the six-year period ending December 31, 2024 by applying perpetuity growth rates ranging from 2.75% to 3.25% of the unlevered free cash flow of TSYS during the final year of the six-year period, which perpetuity growth rates were selected based on J.P. Morgan’s professional judgment and experience, and by applying certain other adjustments J.P. Morgan deemed appropriate. The unlevered free cash flows and the range of terminal asset values were then discounted to present values as of March 31, 2019 using a range of discount rates from 6.5% to 7.5%, which were chosen by J.P. Morgan based upon an analysis of the weighted average cost of capital of TSYS, derived using the capital asset pricing model and J.P. Morgan’s professional judgment and experience. The present value of the unlevered free cash flows and the range of terminal asset values were then adjusted for TSYS’ net debt and unconsolidated investments balance as of March 31, 2019 of $3,549 million to indicate a range of implied per share equity values for TSYS.

J.P. Morgan additionally calculated the unlevered free cash flows related to the synergies from October 1, 2019 through calendar year 2023, taking into the account the costs to achieve such synergies and associated taxes. J.P. Morgan also calculated a range of terminal values for such synergies at the end of this period by applying perpetuity growth rates ranging from 2.75% to 3.25%, which perpetuity growth rates were selected based on J.P. Morgan’s professional judgment and experience. The unlevered free cash flows and the range of terminal values for the synergies were then discounted to present values as of March 31, 2019 using a range of discount rates from 7.0% to 8.0%, which were chosen by J.P. Morgan based upon J.P. Morgan’s professional judgment and experience.

Based on the foregoing, J.P. Morgan’s analysis indicated a range of implied equity values per share of TSYS common stock (rounded to the nearest $0.25) of $128.00 to $192.00 before including the value of the synergies; or, if 100% of the synergies are taken into account, a range of implied equity values per share of TSYS common stock (rounded to the nearest $0.25) of $153.00 to $227.50, in each case, as compared to the closing price per share of TSYS common stock as of May 23, 2019 of $99.62 and an implied price of $119.86 based on the exchange ratio.

Other Information

TSYS Historical Trading Range

J.P. Morgan reviewed the trading prices for the shares of TSYS common stock for the 52-week period ending May 23, 2019, which ranged from $75.58 per share to $102.67 per share, as compared to the closing price per share of TSYS common stock of $99.62 on May 23, 2019 and an implied price of $119.86 based on the exchange ratio. J.P. Morgan noted that the historical trading range analysis was presented for reference purposes only and was not relied upon for valuation purposes.

TSYS Analyst Price Targets

J.P. Morgan reviewed certain publicly available equity research analyst price targets for shares of TSYS common stock and noted that the range of such price targets was generally $92.00 per share to $120.00 per share, as

 

89


Table of Contents

compared to the closing price per share of TSYS common stock of $99.62 on May 23, 2019 and an implied price of $119.86 based on the exchange ratio. J.P. Morgan noted that the analyst price targets were presented for reference purposes only and were not relied upon for valuation purposes.

Global Payments Analysis

Selected Publicly Traded Companies Analysis.

J.P. Morgan reviewed publicly available financial and stock market information for Global Payments and the following six (6) publicly traded companies in the payments and payment processing industry:

 

   

Fidelity National Information Services, Inc.

 

   

Fiserv, Inc.

 

   

Worldpay, Inc.

 

   

Total System Services, Inc.

 

   

EVO Payments, Inc.

 

   

First Data Corporation

J.P. Morgan additionally reviewed publicly available financial and stock market information for the following two (2) publicly traded companies in the global payments industry:

 

   

Visa, Inc.

 

   

Mastercard Incorporated

 

90


Table of Contents

None of the selected companies reviewed is identical to Global Payments and certain of these companies may have characteristics that are materially different from that of Global Payments. The analyses necessarily involve complex considerations and judgments concerning differences in financial and operational characteristics of the companies involved and other factors that could affect the companies differently than would affect Global Payments. For each of Fidelity National Information Services, Inc., Fiserv, Inc., EVO Payments, Inc., Visa, Inc. and Mastercard Incorporated, publicly available financial information was measured as of May 24, 2019 (the last trading day prior to the public announcement of the merger); for Total System Services, Inc., publicly available financial information was measured as of May 23, 2019 (the last trading day prior to public reports that Total System Services, Inc. and Global Payments may be considering a transaction); for Worldpay, Inc., publicly available financial information was measured as of March 15, 2019 (the last trading day prior to the public announcement of a transaction with Fidelity National Information Services, Inc.); and for First Data Corporation, publicly available financial information was measured as of January 15, 2019 (the last trading day prior to the public announcement of a transaction with Fiserv, Inc.). With respect to the selected companies, the information J.P. Morgan presented included the multiple of enterprise value to estimates of calendar year 2019 and calendar year 2020 EBITDA (adjusted by excluding stock-based compensation expense and one-time charges) for the applicable company, which we refer to in this “—Global Payments Analysis” section as EV/Adj. EBITDA. With respect to the selected companies, J.P. Morgan also presented information that included the multiple of share price to estimates of calendar year 2019 and calendar year 2020 earnings per share (adjusted by excluding acquisition-related intangible amortization expenses, stock-based compensation and one-time charges, net of tax benefit related to such items), which we refer to in this “—Global Payments Analysis” section as P/Adj. EPS. Results of this analysis were presented for the selected companies, as indicated in the following table:

 

Company

   2019E
EV/Adj.
EBITDA
     2020E
EV/Adj.
EBITDA
     2019E
P/Adj.
EPS
     2020E
P/Adj.
EPS
 

Fidelity National Information Services, Inc.

     16.1x        14.8x        20.8x        18.4x  

Fiserv, Inc.

     13.7x        12.8x        17.6x        16.0x  

Worldpay, Inc.

     17.8x        15.8x        21.2x        18.1x  

Total System Services, Inc.

     14.5x        13.3x        20.4x        17.9x  

EVO Payments, Inc.

     18.8x        16.6x        50.5x        39.6x  

First Data Corporation

     10.7x        9.9x        11.1x        9.7x  

Visa Inc.

     21.4x        19.0x        28.3x        24.4x  

Mastercard Incorporated

     24.7x        21.4x        32.3x        27.4x  

Based on the above analysis and on J.P. Morgan’s professional judgment and experience, J.P. Morgan selected a calendar year 2019 EV/Adj. EBITDA reference range of 16.0x to 18.0x and a calendar year 2020 EV/Adj. EBITDA reference range of 14.0x to 16.0x. J.P. Morgan then applied that range to Global Payments’ 2019 estimated EBITDA (adjusted by excluding stock-based compensation expense and one-time charges) of $1,697 million, and Global Payments’ 2020 estimated EBITDA (adjusted by excluding stock-based compensation expense and one-time charges) of $1,892 million. The analysis indicated a range of implied equity values per share of Global Payments common stock (rounded to the nearest $0.25) of approximately $140.50 to $162.00 for calendar year 2019, and approximately $136.25 to $160.25 for calendar year 2020, in each case, as compared to the closing price per share of Global Payments common stock as of May 23, 2019 of $147.96.

Based on the above analysis and on J.P. Morgan’s professional judgment and experience, J.P. Morgan selected a calendar year 2019 P/Adj. EPS reference range of 21.0x to 25.5x and a calendar year 2020 P/Adj. EPS reference range of 18.0x to 21.5x. J.P. Morgan then applied that range to Global Payments’ 2019 estimated earnings per share (adjusted by excluding acquisition-related intangible amortization expenses, stock-based compensation and one-time charges, net of tax benefit related to such items) of $5.89, and Global Payments’ 2020 estimated earnings per share (adjusted by excluding acquisition-related intangible amortization expenses, stock-based compensation and one-time charges, net of tax benefit related to such items) of $6.90, to derive implied per share price ranges of Global Payments common stock. This analysis indicated a range of implied equity values per share for Global Payments common stock (rounded to the nearest $0.25) of approximately $123.75 to $150.25

 

91


Table of Contents

for calendar year 2019, and approximately $124.25 to $148.50 for calendar year 2020, in each case, as compared to the closing price per share of Global Payments common stock as of May 23, 2019 of $147.96.

Discounted Cash Flow Analysis.

J.P. Morgan conducted a discounted cash flow analysis for the purpose of determining the fully diluted equity value per share for Global Payments common stock using the financial projections described in “The Merger—Certain Unaudited Prospective Financial Information”. J.P. Morgan calculated the unlevered free cash flows that Global Payments is expected to generate during calendar years 2019 through 2023 based upon the financial projections described in “The Merger—Certain Unaudited Prospective Financial Information”. J.P. Morgan also calculated a range of terminal asset values for Global Payments at the end of the five-year period ending December 31, 2023 by applying perpetuity growth rates ranging from 3.00% to 3.50% of the unlevered free cash flow of Global Payments for the final year of the five-year period, which perpetuity growth rates were selected based on J.P. Morgan’s professional judgment and experience, and by applying certain other adjustments J.P. Morgan deemed appropriate. The unlevered free cash flows and the range of terminal asset values were then discounted to present values as of March 31, 2019 using a range of discount rates from 7.0% to 8.0%, which were chosen by J.P. Morgan based upon an analysis of the weighted average cost of capital of Global Payments, derived using the capital asset pricing model and J.P. Morgan’s professional judgment and experience. The present value of the unlevered free cash flows and the range of terminal asset values were then adjusted for Global Payments’ net debt and non-controlling interest balance as of March 31, 2019 of $5,041 million to indicate a range of implied per share equity values of Global Payments common stock.

Based on the foregoing, J.P. Morgan’s analysis indicated a range of implied equity values per share for Global Payments common stock (rounded to the nearest $0.25) of $178.75 to $264.25, as compared to the closing price per share of Global Payments common stock of $147.96 on May 23, 2019.

Other Information

Global Payments Historical Trading Range

J.P. Morgan reviewed the trading prices for the shares of Global Payments common stock for the 52-week period ending May 23, 2019, which ranged from $94.81 per share to $152.24 per share, as compared to the closing price per share of Global Payments common stock of $147.96 on May 23, 2019. J.P. Morgan noted that the historical trading range analysis was presented for reference purposes only and was not relied upon for valuation purposes.

Global Payments Analyst Price Targets

J.P. Morgan reviewed certain publicly available equity research analyst share price targets for the shares of Global Payments common stock and noted that the range of such price targets was generally $105.00 per share to $182.00 per share, as compared to the closing price per share of Global Payments common stock of $147.96 on May 23, 2019. J.P. Morgan noted that the analyst price targets were presented for reference purposes only and were not relied upon for valuation purposes.

Relative Valuation Exchange Ratio Analysis

Selected Publicly Traded Companies Analysis.

J.P. Morgan compared the results for Global Payments to the results for TSYS with respect to the calendar year 2019 EV/Adj. EBITDA multiples and calendar year 2020 EV/Adj. EBITDA multiples in the “—Global Payments Analysis—Selected Publicly Traded Companies Analysis” and “—TSYS Analysis—Selected Publicly Traded Companies Analysis” sections above to determine a range of implied exchange ratios. Specifically, J.P. Morgan divided (i) the lowest implied equity value per share for TSYS by the highest implied equity value per share for Global Payments, and (ii) the highest implied equity value per share for TSYS by the lowest implied equity value per share for Global Payments, to derive the range of exchange ratios implied by the selected

 

92


Table of Contents

publicly traded companies analyses. The analysis resulted in a range of implied exchange ratios of 0.5926x to 0.8594x for calendar year 2019 and a range of implied exchange ratios of 0.6100x to 0.8807x for calendar year 2020, as compared to the exchange ratio of 0.8101x.

J.P. Morgan also compared the results for Global Payments to the results for TSYS with respect to calendar year 2019 P/Adj. EPS multiples and calendar year 2020 P/Adj. EPS multiples in the “—Global Payments Analysis—Selected Publicly Traded Companies Analysis” and “—TSYS Analysis—Selected Publicly Traded Companies Analysis” sections above to determine a range of implied exchange ratios. Specifically, J.P. Morgan divided (i) the lowest implied equity value per share for TSYS by the highest implied equity value per share for Global Payments, and (ii) the highest implied equity value per share for TSYS by the lowest implied equity value per share for Global Payments, to derive the range of exchange ratios implied by the selected publicly traded companies analyses. The analysis resulted in a range of implied exchange ratios of 0.6273x to 0.8384x for calendar year 2019 and a range of implied exchange ratios of 0.6465x to 0.8390x for calendar year 2020, as compared to the exchange ratio of 0.8101x.

Discounted Cash Flow Analysis.

J.P. Morgan compared the results for Global Payments to the results for TSYS with respect to the discounted cash flow analyses in the “—Global Payments Analysis—Discounted Cash Flow Analysis” and “—TSYS Analysis—Discounted Cash Flow Analysis” sections above to determine a range of implied exchange ratios. Specifically, J.P. Morgan divided (i) the lowest implied equity value per share for TSYS by the highest implied equity value per share for Global Payments, and (ii) the highest implied equity value per share for TSYS by the lowest implied equity value per share for Global Payments, to derive the range of implied exchange ratios of 0.4844x to 1.0741x, as compared to the exchange ratio of 0.8101x. This analysis excluded the effect of synergies.

Implied Historical Exchange Ratio

J.P. Morgan divided the price per share of TSYS common stock by the price per share of Global Payments common stock for each day of the 52-week period ending May 23, 2019 to determine a range of implied exchange ratios, which was 0.6638x to 0.8330x, as compared to the exchange ratio of 0.8101x. J.P. Morgan noted that the implied historical exchange ratio analysis was presented for reference purposes only and was not relied upon for valuation purposes.

Illustrative Value Creation Analysis

Based on Discounted Cash Flow

J.P. Morgan conducted an illustrative value creation analysis that compared the implied equity value of Global Payments common stock derived from a discounted cash flow valuation on a stand-alone basis to the pro forma combined company implied equity value. J.P. Morgan determined the pro forma combined company equity value per share by calculating the sum of: (i) the implied equity value of Global Payments, using the midpoint value determined in J.P. Morgan’s discounted cash flow analysis described above in the “—Global Payments Analysis—Discounted Cash Flow Analysis” section above, (ii) the implied equity value of TSYS, using the midpoint value determined in J.P. Morgan’s discounted cash flow analysis described above in the “—TSYS Analysis—Discounted Cash Flow Analysis” section above and (iii) the present value of the synergies, using the midpoint of the present value of the synergies determined in J.P. Morgan’s discounted cash flow analysis described above in the “—TSYS Analysis—Discounted Cash Flow Analysis” section above. The analysis indicated that the illustrative value creation at the exchange ratio yielded value accretion to the holders of Global Payments common stock of approximately $890 million. There can be no assurance, however, that the estimated synergies or estimated costs to achieve such synergies will not be substantially greater or less than Global Payments management’s estimates.

 

93


Table of Contents

Based on Market Value

For reference purposes only and not as a component of its fairness analysis, J.P. Morgan conducted an illustrative value creation analysis that compared the closing market value of Global Payments common stock on May 23, 2019 to the pro forma combined company equity value following the merger. J.P. Morgan determined the pro forma combined company equity value by calculating the sum of: (i) the public market equity value of Global Payments as of May 23, 2019, (ii) the public market equity value of TSYS as of May 23, 2019 and (iii) the capitalized value of the synergies, calculated by applying a blended calendar year 2019 Adj. EBITDA multiple of 15.7x to the $350 million in run-rate EBITDA synergies, calculated as the sum of the run-rate cost synergy estimate of $300 million and the run-rate revenue synergy estimate of $100 million (assuming, at the direction of Global Payments management, a 50% adjusted EBITDA margin with respect to such run-rate revenue synergies), reduced by estimates for costs to achieve the synergies of $300 million (assumed, at the direction of Global Payments management, to be equal to Global Payments management’s estimate of run-rate cost synergies), in each case determined as described in the section entitled “—Certain Unaudited Prospective Financial Information—Certain Estimated Synergies Attributable to the Merger” beginning on page [    ]. The analysis indicated that the illustrative market-based value creation at the exchange ratio yielded value accretion to the holders of Global Payments common stock of approximately $630 million. There can be no assurance, however, that the synergies or estimated costs to achieve such synergies will not be substantially greater or less than Global Payments management’s estimates.

Miscellaneous

The foregoing summary of certain material financial analyses does not purport to be a complete description of the analyses or data presented by J.P. Morgan. The preparation of a fairness opinion is a complex process and is not necessarily susceptible to partial analysis or summary description. J.P. Morgan believes that the foregoing summary and its analyses must be considered as a whole and that selecting portions of the foregoing summary and these analyses, without considering all of its analyses as a whole, could create an incomplete view of the processes underlying the analyses and its opinion. As a result, the ranges of valuations resulting from any particular analysis or combination of analyses described above were merely utilized to create points of reference for analytical purposes and should not be taken to be the view of J.P. Morgan with respect to the actual value of Global Payments or TSYS. The order of analyses described does not represent the relative importance or weight given to those analyses by J.P. Morgan. In arriving at its opinion, J.P. Morgan did not attribute any particular weight to any analyses or factors considered by it and did not form an opinion as to whether any individual analysis or factor (positive or negative), considered in isolation, supported or failed to support its opinion. Rather, J.P. Morgan considered the totality of the factors and analyses performed in determining its opinion.

Analyses based upon forecasts of future results are inherently uncertain, as they are subject to numerous factors or events beyond the control of the parties and their advisors. Accordingly, forecasts and analyses used or made by J.P. Morgan are not necessarily indicative of actual future results, which may be significantly more or less favorable than suggested by those analyses. Moreover, J.P. Morgan’s analyses are not and do not purport to be appraisals or otherwise reflective of the prices at which businesses actually could be acquired or sold. None of the selected companies reviewed as described in the above summary is identical to Global Payments or TSYS, and none of the selected transactions reviewed was identical to the merger. However, the companies selected were chosen because they are publicly traded companies with operations and businesses that, for purposes of J.P. Morgan’s analysis, may be considered similar to those of Global Payments and TSYS. The transactions selected were similarly chosen because their participants, size and other factors, for purposes of J.P. Morgan’s analysis, may be considered similar to the merger. The analyses necessarily involve complex considerations and judgments concerning differences in financial and operational characteristics of the companies involved and other factors that could affect the companies compared to Global Payments and TSYS and the transactions compared to the merger.

As a part of its investment banking business, J.P. Morgan and its affiliates are continually engaged in the valuation of businesses and their securities in connection with mergers and acquisitions, investments for passive

 

94


Table of Contents

and control purposes, negotiated underwritings, secondary distributions of listed and unlisted securities, private placements, and valuations for corporate and other purposes. J.P. Morgan was selected to advise Global Payments with respect to the merger on the basis of, among other things, such experience and its qualifications and reputation in connection with such matters and its familiarity with Global Payments, TSYS and the industries in which they operate.

Global Payments has agreed to pay J.P. Morgan a total transaction fee of $17 million, $2 million of which became payable to J.P. Morgan in connection with delivery by J.P. Morgan of its opinion, and the remainder of which becomes payable upon the completion of the merger. In addition, Global Payments has agreed to reimburse J.P. Morgan for certain expenses incurred in connection with its services, including the fees and disbursements of counsel, and will indemnify J.P. Morgan for certain liabilities arising out of J.P. Morgan’s engagement.

During the two years preceding the date of J.P. Morgan’s opinion, J.P. Morgan and its affiliates have had commercial or investment banking relationships with Global Payments and TSYS for which J.P. Morgan and such affiliates have received customary compensation. Such services during such period have included acting as joint lead arranger on Global Payments’ term loan facility which closed in October 2018; as joint lead arranger on Global Payments’ revolving credit and term loan facilities which closed in June 2018; as joint bookrunner on Global Payments’ term loan facility which closed in March 2018; as financial advisor on Global Payments’ acquisition of SICOM Systems, Inc. which closed in October 2018; as joint bookrunner on TSYS’ offering of debt securities which closed in May 2018; and as joint lead arranger and joint bookrunner on TSYS’ revolving credit facility which closed in April 2018. Further, on May 27, 2019, an affiliate of J.P. Morgan separately entered into agreements with Global Payments pursuant to which such affiliate will arrange for and provide financing to Global Payments in connection with the merger. J.P. Morgan estimates its affiliate will receive aggregate fees of approximately $8 to $11 million pursuant to these financing agreements. In addition, J.P. Morgan and its affiliates hold, on a proprietary basis, less than 1% of the outstanding common stock of each of Global Payments and TSYS. During the two-year-period preceding delivery of its opinion on May 27, 2019, the aggregate fees recognized by J.P. Morgan from Global Payments were approximately $2.7 million, which amount excludes an additional approximately $12 million in aggregate fees recognized by J.P. Morgan as financial advisor to the target in connection with Vista Equity Partners’ sale of the communities and sports divisions of Athlaction Topco, LLC to Global Payments, which closed on September 1, 2017, and the aggregate fees recognized by J.P. Morgan from TSYS were approximately $1.3 million. In the ordinary course of their businesses, J.P. Morgan and its affiliates may actively trade the debt and equity securities or financial instruments (including derivatives, bank loans or other obligations) of Global Payments or TSYS for their own accounts or for the accounts of customers and, accordingly, they may at any time hold long or short positions in such securities or other financial instruments.

TSYS’ Reasons for the Merger; Recommendation of TSYS’ Board of Directors

In reaching its decision to adopt and approve the merger agreement and the transactions contemplated thereby, including the merger, and to recommend that its shareholders approve the merger agreement, the TSYS board of directors evaluated the merger agreement, the merger and the other transactions contemplated by the merger agreement in consultation with TSYS management, as well as with TSYS’ legal and financial advisors, and considered a number of factors, including among others, the following material factors (which are presented below in no particular order and which were neither ranked nor weighted in any manner by the TSYS board of directors):

 

   

each of TSYS’ and Global Payments’ business, operations, financial condition, asset quality, earnings, and prospects, and the TSYS board of directors’ belief that the merger would create the premier payments technology company at scale in the largest and most attractive financial technology markets worldwide, with further exposure to faster growth geographies and digital payment trends;

 

   

the TSYS board of directors’ belief that the combined company will have leading positions in integrated payments, owned software in both the merchant and issuing businesses, increased scale in

 

95


Table of Contents
 

ecommerce and omnichannel solutions, and provide expanded digital solutions to financial institutions around the world;

 

   

the TSYS board of directors’ expectation that the combined company will have the ability to leverage the increased scale of the resulting entity to make additional investments in innovation and technology to address competition and disruption in the payments and financial services industries and enhance customer offerings on a global basis;

 

   

the fact that TSYS shareholders as of immediately prior to the completion of the merger are expected to own approximately forty eight-percent (48%) of the fully diluted shares of the combined company immediately following the completion of the merger, and will have the opportunity to share in the future growth and expected synergies of the combined company while retaining the flexibility of selling all or a portion of those shares;

 

   

the TSYS board of directors’ belief that Global Payments’ earnings and prospects, and the synergies potentially available in the proposed merger, which included the TSYS board of directors’ expectation that the merger will deliver at least $300 million of run-rate cost synergies and at least $100 million of run-rate revenue synergies over a three-year period, would create the opportunity for the combined company to have superior future earnings and prospects compared to TSYS’ earnings and prospects on a stand-alone basis;

 

   

that the combined company is anticipated to have a capital structure, balance sheet and capital allocation policy consistent with investment-grade debt ratings;

 

   

the TSYS board of directors’ belief that the pro forma profile of the combined company is expected to generate approximately $2.5 billion of pro forma adjusted free cash flow and have sufficient liquidity and financial flexibility to execute on its strategy, and return capital to shareholders;

 

   

the fact that the merger consideration represents a premium over the market prices at which TSYS common stock traded prior to the announcement of the merger agreement, including an implied premium of approximately:

 

   

17% to the all-time high share price of TSYS common stock prior to public rumors that TSYS and Global Payments were exploring a potential transaction;

 

   

20% to TSYS’ unaffected common stock price as of May 23, 2019, which was the last trading day prior to public rumors that TSYS and Global Payments were exploring a potential transaction; and

 

   

23% to the 60-day VWAP of the TSYS common stock for the 60 trading day period ending on May 23, 2019;

 

   

the terms and conditions of the merger agreement, including:

 

   

the fact that the exchange ratio is fixed, which the TSYS board of directors believed was consistent with market practice for transactions of this type and with the strategic purpose of the transaction, and which also allows for TSYS shareholders to potentially benefit from an increase in the trading price of Global Payments stock during the pendency of the transaction;

 

   

the customary and reciprocal nature of the representations, warranties, and covenants of TSYS and Global Payments in the merger agreement;

 

   

the flexibility permitted under the interim operating covenants which restrict the conduct of TSYS’ business prior to closing of the merger, and the fact that Global Payments is subject to substantially similar provisions;

 

   

the parties’ covenants to use their respective reasonable best efforts to obtain regulatory approvals, including the commitment of the parties to agree to divestitures or other remedies (other than divestitures or remedies that would reasonably be expected to be material and adverse to the combined company and its subsidiaries, taken as a whole, after giving effect to the merger, and including the projected synergies expected to result therefrom);

 

96


Table of Contents
   

the corporate governance provisions of the merger agreement, including the provisions providing that (i) the combined company’s board of directors would be comprised of an equal number of TSYS and Global Payments directors, (ii) Mr. Woods will serve as chairman of the board of directors and Mr. Cloninger will serve as lead independent director of the combined company, (iii) the membership of the committees of the board of directors of the combined company will be, as practicably as possible, evenly split between Global Payments directors and TSYS directors, with the chairs of the Technology Committee and Governance and Nominating Committee designated by TSYS directors, and (iv) prior to closing, Mr. Woods will, in consultation with Messrs. Sloan, Jacobs and Cloninger, make recommendations for approval by the board of directors of the combined company as to, among other matters, the corporate governance guidelines and other board procedures to reflect the best practices of TSYS, Global Payments and otherwise, each of which provisions the TSYS board of directors believes enhances the likelihood that the strategic benefits TSYS expects to achieve as a result of the merger will be realized;

 

   

the deal protection and termination provisions of the merger agreement, including TSYS’ right to receive the termination fee of $860 million if the merger agreement is terminated under certain circumstances, including (i) in the event that the Global Payments board of directors no longer recommends that Global Payments shareholders vote “FOR” the proposal to approve the merger agreement or (ii) in the event that Global Payments breaches its no-shop or related covenants in any material respects; and

 

   

the review of the TSYS board of directors, with the assistance of TSYS’ advisors, of the terms and conditions of other recent comparable transactions, including the governance terms, premiums relative to share prices, consideration mix, credit ratings and leverage targets, and announced synergy targets, and its overall belief that the terms of the merger agreement were consistent with market practice and in the best interest of TSYS and its shareholders.

 

   

historical information concerning each of TSYS’ and Global Payments’ respective business, financial condition, results of operations, earnings, trading prices, technology positions, management, competitive positions and prospects on a stand-alone basis and on a forecasted combined basis;

 

   

the TSYS board of directors’ knowledge of the current environment in the payments and financial services industries, including the possible effects that increasing consolidation within the payments and financial services industries may have on TSYS’ business;

 

   

the TSYS board of directors’ belief that the TSYS and Global Payments peopled-centered and performance-driven cultures were similar and compatible, which will facilitate integration and implementation of the transaction;

 

   

TSYS’ and Global Payments’ shared belief in a purpose-driven and thoughtful approach to the business combination and resulting entity, structured to achieve an optimal level of potential synergies, and minimize the loss of customers and employees;

 

   

the potential strategic alternatives to the merger, including continuing to operate as an independent, stand-alone company, pursuing growth through M&A transactions reasonably available to TSYS, considering a merger of equals transaction, and a potential sale of TSYS to a third party, the potential value to the TSYS shareholders that might result from such alternatives, including the timing and likelihood of accomplishing and creating value in such alternatives, and the assessment of the TSYS board of directors that none of these alternatives were reasonably likely to result in greater value for TSYS shareholders than the merger;

 

   

the oral opinion of Goldman Sachs, subsequently confirmed in Goldman Sachs’ written opinion dated May 27, 2019, to the TSYS board of directors to the effect that, as of the date thereof, and based upon and subject to the factors and limitations set forth in Goldman Sachs’ written opinion, the exchange ratio pursuant to the merger agreement was fair, from a financial point of view, to the holders (other

 

97


Table of Contents
 

than Global Payments and its affiliates) of shares of TSYS common stock, as more fully described in the section entitled “—Opinions of TSYS’ Financial Advisors—Opinion of Goldman Sachs” beginning on page [    ];

 

   

the oral opinion of Greenhill, subsequently confirmed in Greenhill’s written opinion dated May 27, 2019, to the TSYS board of directors to the effect that, as of the date thereof, and based upon and subject to the limitations and assumptions set forth in Greenhill’s written opinion, the exchange ratio pursuant to the merger agreement was fair, from a financial point of view, to the holders of TSYS common stock, as more fully described in the section entitled “—Opinions of TSYS’ Financial Advisors—Opinion of Greenhill” beginning on page [    ];

 

   

the fact that the merger is intended to qualify as a reorganization for U.S. federal income tax purposes;

 

   

the TSYS board of directors’ review and discussions with TSYS senior management and TSYS’ advisors concerning the due diligence examination of the operations and financial condition and prospects of Global Payments;

 

   

the fact that Global Payments obtained committed financing to potentially refinance certain indebtedness and pay other expenses in connection with the transaction; and

 

   

the likelihood that the merger would be completed, including after consideration of the risks related to certain conditions and regulatory approvals which will be required to complete the transactions contemplated by the merger agreement.

The TSYS board of directors also considered the potential risks and negative factors related to the transaction but concluded that the anticipated benefits of combining with Global Payments were likely to substantially outweigh these risks. These potential risks and negative factors included:

 

   

the fact that the Global Payments stock consideration is based on a fixed exchange ratio, which means that TSYS shareholders could be adversely affected by a decrease in the trading price of Global Payments’ stock during the pendency of the transaction;

 

   

the potential risks associated with achieving anticipated synergies and successfully integrating TSYS’ business, operations and workforce with those of Global Payments;

 

   

the potential risk of diverting management attention and resources from the operation of TSYS’ business during the pendency of the merger;

 

   

the risk of potential employee attrition and potential adverse effects on TSYS’ business and customer relationships as a result of the pending merger;

 

   

the risk that the requisite regulatory approvals or the requisite approval of the Global Payments shareholders might not be obtained and, as a result, the merger may not be completed;

 

   

the risk that governmental entities may impose requirements on the combined company that may adversely affect the ability of the combined company to realize some of the expected benefits of the merger;

 

   

the fact that certain provisions of the merger agreement, although reciprocal, may have the effect of discouraging proposals for alternative acquisition transactions involving TSYS, including: (i) the restriction on TSYS’ ability to solicit proposals for alternative transactions; (ii) the requirement that the TSYS board of directors submit the merger agreement to the TSYS shareholders for approval in certain circumstances, even if it withdraws its recommendation for the merger; and (iii) the requirement that TSYS pay a termination fee of $860 million to Global Payments in certain circumstances following the termination of the merger agreement;

 

   

the terms of the merger agreement that restrict TSYS’ abilities to operate its business outside of the ordinary course before the closing of the merger;

 

   

the risk that, if Global Payments pays TSYS the $860 million termination fee pursuant to the merger agreement in certain circumstances following the termination of the merger agreement, such fee does

 

98


Table of Contents
 

not sufficiently compensate TSYS for adverse effects arising out of the termination of the merger agreement;

 

   

the fees and expenses associated with completing the merger; and

 

   

the risks of the type and nature described under the sections entitled “Risk Factors” and “Cautionary Statement Regarding Forward-Looking Statements” beginning on pages [    ] and [    ], respectively.

The TSYS board of directors considered all of the factors and concluded that the uncertainties, risks and potential negative factors relevant to the merger were outweighed by the potential benefits that it expected TSYS shareholders would achieve as a result of the merger.

This discussion of the information and factors considered by the TSYS board of directors includes the principal positive and negative factors considered by the TSYS board of directors, but is not intended to be exhaustive and may not include all of the factors considered. In view of the wide variety of factors considered in connection with its evaluation of the merger and the complexity of these matters, the TSYS board of directors did not find it useful to and did not attempt to quantify, rank or otherwise assign relative or specific weights to these factors. Rather, the TSYS board of directors viewed its determination and recommendation as being based on the totality of the information presented to it and the factors it considered. In addition, individual members of the TSYS board of directors may have given differing weights to different factors. It should be noted that this explanation of the reasoning of the TSYS board of directors and certain information presented in this section are forward-looking in nature and, therefore, that information should be read in light of the factors discussed in the section entitled “Cautionary Statement Regarding Forward-Looking Statements” beginning on page [    ].

In considering the recommendation of the TSYS board of directors, you should be aware that certain directors and executive officers of TSYS may have interests in the merger that are different from, or in addition to, interests of shareholders of TSYS generally and may create potential conflicts of interest. The TSYS board of directors was aware of these interests and considered them when evaluating and negotiating the merger agreement, the merger, and the other transactions contemplated by the merger agreement, and in recommending to TSYS shareholders that they vote in favor of the TSYS merger proposal. See the section entitled “The Merger—Interests of TSYS’ Directors and Executive Officers in the Merger” beginning on page [    ].

For the reasons set forth above, the TSYS board of directors unanimously recommends that the holders of TSYS common stock vote “FOR” the TSYS merger proposal.

Opinions of TSYS’ Financial Advisors

Opinion of Greenhill

At the May 27, 2019 meeting of the TSYS board of directors held to evaluate the merger, Greenhill rendered an oral opinion, confirmed by delivery of a written opinion dated as of May 27, 2019, to the effect that, as of such date and subject to and based on the various assumptions made, procedures followed, matters considered and qualifications and limitations of the review set forth therein, the exchange ratio pursuant to the merger agreement was fair, from a financial point of view, to holders of TSYS common stock.

The full text of the written opinion of Greenhill, dated May 27, 2019, which sets forth the assumptions made, procedures followed, matters considered and qualifications and limitations of the review undertaken in connection with the opinion, is attached as Annex D and is incorporated herein by reference. The summary of the Greenhill opinion provided in this joint proxy statement/prospectus is qualified in its entirety by reference to the full text of the opinion. We encourage you to read Greenhill’s opinion and this section carefully and in their entirety. Greenhill provided advisory services and its opinion for the information and assistance of the TSYS board of directors in connection with its consideration of the merger. Greenhill’s opinion is not a recommendation as to how any holder of shares of TSYS common stock should vote with respect to matters related to the merger, or any other matter.

 

99


Table of Contents

Pursuant to an engagement letter between TSYS and Greenhill, TSYS has agreed to pay Greenhill a transaction fee of $32.5 million, $5 million of which became payable upon the announcement by TSYS of the merger agreement and the rest of which is contingent upon consummation of the merger.

For purposes of its opinion, Greenhill, among other things:

 

   

reviewed the draft of the merger agreement, dated May 27, 2019, and certain related documents;

 

   

reviewed certain publicly available financial statements of each of TSYS and Global Payments;

 

   

reviewed certain other publicly available business, operating and financial information relating to each of TSYS and Global Payments;

 

   

reviewed certain information, including financial forecasts and other financial and operating data, concerning TSYS supplied to or discussed with us by management of TSYS, including financial forecasts for TSYS prepared by the management of TSYS and approved for our use by TSYS as described in “The Merger—Certain Unaudited Prospective Financial Information” (which we refer to in this section of this joint proxy statement/prospectus as the “TSYS forecasts”);

 

   

reviewed certain information, including financial forecasts and other financial and operating data, concerning Global Payments supplied to or discussed with us by management of Global Payments, including financial forecasts for Global Payments prepared by the management of Global Payments and approved for our use by TSYS as described in “The Merger—Certain Unaudited Prospective Financial Information” (which we refer to in this section of this joint proxy statement/prospectus as the “Global Payments forecasts”);

 

   

reviewed certain information regarding the amount and timing of potential cost efficiencies and financial and operational benefits anticipated from the merger prepared by managements of TSYS and Global Payments and approved for our use by TSYS as described in “The Merger—Certain Unaudited Prospective Financial Information—Certain Estimated Synergies Attributable to the Merger” (which we refer to in this section of this joint proxy statement/prospectus as the “synergies”);

 

   

discussed the past and present operations and financial condition and the prospects of TSYS with senior executives of TSYS;

 

   

discussed the past and present operations and financial condition and the prospects of Global Payments with senior executives of Global Payments and TSYS;

 

   

reviewed the historical market prices and trading activity for the TSYS common stock and the Global Payments common stock and analyzed their respective implied valuation multiples;

 

   

analyzed valuations derived for each of TSYS and Global Payments by discounting future unlevered cash flows and a terminal value at discount rates we deemed appropriate;

 

   

analyzed valuations derived for each of TSYS and Global Payments based on certain financial information and implied valuation multiples of certain publicly traded companies that we deemed relevant;

 

   

conducted a sum-of-the-parts analysis for TSYS by separately valuing the parts of TSYS’ business at multiples we deemed appropriate;

 

   

derived ranges of implied relative ownership of TSYS and Global Payments in the pro forma combined company and respective ranges of implied exchange ratios, based on the foregoing analyses;

 

   

analyzed the relative contributions of TSYS and Global Payments to the pro forma combined company, based upon a number of metrics that we deemed relevant;

 

   

calculated implied value creation for the TSYS shareholders and the Global Payments shareholders as a result of the merger based on certain financial information, including the synergies, and implied valuation multiples of certain publicly traded companies that we deemed relevant;

 

100


Table of Contents
   

participated in discussions and negotiations among representatives of TSYS and its legal advisors and representatives of Global Payments and its legal and financial advisors; and

 

   

performed such other analyses and considered such other factors as we deemed appropriate.

In arriving at its opinion, Greenhill assumed and relied upon, without independent verification, the accuracy and completeness of the information and data publicly available, supplied or otherwise made available to, or reviewed by or discussed with Greenhill. With respect to the TSYS forecasts, Greenhill assumed that such TSYS forecasts were reasonably prepared on a basis reflecting the best currently available estimates and good faith judgments of the management of TSYS, and Greenhill relied upon the TSYS forecasts in arriving at its opinion. With respect to the Global Payments forecasts, Greenhill assumed that such Global Payments forecasts were reasonably prepared on a basis reflecting the best currently available estimates and good faith judgment of the management of Global Payments, and Greenhill relied upon the Global Payments forecasts in arriving at its opinion. With respect to the synergies, Greenhill assumed that such synergies were reasonably prepared on a basis reflecting the best currently available estimates and good faith judgments of the managements of TSYS and Global Payments, and Greenhill relied upon such synergies in arriving at its opinion. Greenhill expressed no opinion with respect to the TSYS forecasts, the Global Payments forecasts or the synergies or the assumptions upon which they were based.

In arriving at its opinion, Greenhill made no independent evaluation or appraisal of the assets or liabilities (contingent or otherwise) of TSYS or Global Payments, nor was Greenhill furnished with any such evaluation or appraisal. Greenhill assumed, with the consent of TSYS, that the merger will be treated as a tax-free reorganization for federal income tax purposes. Greenhill assumed that the merger will be consummated in accordance with the terms set forth in the final, executed merger agreement, which Greenhill further assumed was identical in all material respects to the latest draft thereof it reviewed, and without waiver of any material terms or conditions set forth in the merger agreement. Greenhill further assumed that all governmental, regulatory and other consents and approvals necessary for the consummation of the merger will be obtained without any effect on TSYS, Global Payments, the merger or the contemplated benefits of the merger in any way meaningful to Greenhill’s analysis. Greenhill is not a legal, regulatory, accounting or tax expert and relied on the assessments made by TSYS and Global Payments and their respective advisors with respect to such issues. Greenhill’s opinion is necessarily based on financial, economic, market and other conditions as in effect on, and the information made available to Greenhill as of, the date of the written opinion. It should be understood that subsequent developments may affect Greenhill’s opinion, and Greenhill does not have any obligation to update, revise, or reaffirm its opinion.

Summary of Greenhill’s Financial Analysis

The following is a summary of the material financial and comparative analyses contained in the presentation that was made by Greenhill to the TSYS board of directors in connection with rendering its opinion described above. The following summary, however, does not purport to be a complete description of the analyses performed by Greenhill, nor does the order of analyses described represent the relative importance or weight given to those analyses by Greenhill. Some of the summaries of the financial analyses include information presented in tabular format. In order to fully understand the financial analyses performed by Greenhill, the tables must be read together with the full text of each summary and are not alone a complete description of Greenhill’s financial analyses. Considering the data set forth in the tables below without considering the narrative description of the financial analyses, including the methodologies and assumptions underlying such analyses, could create a misleading or incomplete view of Greenhill’s financial analysis.

Discounted Cash Flow Analysis

Greenhill performed separate discounted cash flow analyses of TSYS and Global Payments by calculating the estimated present value of the stand-alone unlevered, after-tax free cash flows that TSYS was projected to generate during the years ending December 31, 2019 through December 31, 2024, and that Global Payments was

 

101


Table of Contents

projected to generate during the years ending December 31, 2019 through December 31, 2023. In these analyses, Greenhill utilized projections included in the TSYS forecasts and the Global Payments forecasts, as applicable. Greenhill calculated terminal values for TSYS and Global Payments by applying to TSYS’ and Global Payments’ respective stand-alone unlevered, steady state after-tax free cash flows for the year ending, in the case of TSYS, December 31, 2024 and, in the case of Global Payments, December 31, 2023 a selected range of perpetuity growth rates of 2.00% to 3.00%, which was estimated by Greenhill based on its professional judgment and experience, taking into account the TSYS forecasts and the Global Payments forecasts, as applicable and market expectations regarding long-term real growth of gross domestic product and inflation. The present values (as of June 30, 2019) of TSYS’ and Global Payments’ respective cash flows and terminal values were then calculated using a selected discount rate range of, in the case of TSYS, 6.62% to 7.62%, and, in the case of Global Payments, 6.48% to 7.48%, based on TSYS’ and Global Payments’ respective estimated weighted average cost of capital (calculated using the cost of equity derived from the capital asset pricing model and the estimated after-tax cost of debt).

Greenhill used the results of the discounted cash flow analyses to calculate a range of implied estimated equity values and estimated per share prices for the TSYS common stock and the Global Payments common stock. Market data utilized by Greenhill was as of May 23, 2019. Fully diluted shares of TSYS common stock outstanding and of Global Payments common stock outstanding were as of May 23, 2019, as determined by TSYS management and Global Payments management, respectively. Net debt amounts (taking into account equity investments and/or non-controlling interests) as of April 30, 2019 for TSYS and Global Payments were $3,536 million and $5,044 million, respectively, as provided by TSYS management and Global Payments management, respectively. The following table reflects the high and low implied estimated TSYS and Global Payments equity values and high and low implied estimated per share values for the TSYS common stock and the Global Payments common stock calculated by Greenhill in performing these analyses:

 

($ in millions, except per share values)
TSYS    Global Payments
Implied Equity Value    Implied Share Price    Implied Equity Value    Implied Share Price
Low    High    Low    High    Low    High    Low    High
$19,596    $31,205    $109.32    $174.08    $27,894    $45,516    $177.13    $289.03

Greenhill used the high and low implied estimated TSYS and Global Payments equity values and high and low implied estimated per share values for the TSYS common stock and the Global Payments common stock to calculate (1) an implied TSYS ownership percentage in the combined business utilizing the high TSYS implied equity value and the low Global Payments equity value, (2) an implied TSYS ownership percentage in the combined business utilizing the low TSYS implied equity value and the high Global Payments implied equity value, (3) an implied exchange ratio utilizing the high TSYS implied equity value and the low Global Payments implied equity value and (4) an implied exchange ratio utilizing the low TSYS implied equity value and the high Global Payments implied equity value. Greenhill compared these ranges to the proposed exchange ratio and resulting pro forma ownership in the combined business. The results of these analyses are summarized below:

 

Implied TSYS Ownership Percentage in Combined Business   Implied Exchange Ratio
Low TSYS / High
Global Payments
  High TSYS / Low
Global Payments
  Low TSYS / High
Global Payments
   High TSYS / Low
Global Payments
30.1%   52.8%   0.378x    0.983x

Selected Comparable Company Analysis

Greenhill performed a whole company comparable company analysis, which compared selected financial information, ratios and multiples for TSYS and Global Payments to the corresponding data for publicly traded companies selected by Greenhill. As part of the comparable company analysis, Greenhill also performed a sum-of-the-parts analysis for TSYS, which compared selected financial information, ratios and multiples for TSYS’ issuer solutions, merchant solutions and consumer solutions segments to the corresponding data for

 

102


Table of Contents

publicly traded companies selected by Greenhill that had businesses which were comparable to the TSYS businesses analyzed.

The companies used in the TSYS and Global Payments whole company comparisons were:

 

   

Worldpay, Inc.

 

   

First Data Corporation

 

   

EVO Payments, Inc.

 

   

Fidelity National Information Services, Inc.

 

   

Fiserv, Inc.

 

   

Green Dot Corporation

 

   

FleetCor Technologies, Inc.

 

   

WEX Inc.

Although none of the selected companies is directly comparable to TSYS or Global Payments, Greenhill selected each of the above-listed companies because, among other reasons, they are publicly traded companies with operations or businesses in related sectors or for purposes of analysis may be considered similar or reasonably similar to the operations of TSYS or Global Payments, as applicable. However, because of the inherent differences between the business, operations and prospects of TSYS and Global Payments and those of the selected companies, Greenhill believed that it was inappropriate to, and therefore did not, rely solely on the numerical results of the selected company analysis. Accordingly, Greenhill also made qualitative judgments concerning differences between the business, financial and operating characteristics and prospects of TSYS and Global Payments and the selected companies that could affect the public trading values of each in order to provide a context in which to consider the results of the quantitative analysis. These qualitative judgments related primarily to the differing business models, sizes, growth prospects, revenue mix, profitability levels and degree of operational risk between TSYS and Global Payments and the companies included in the selected company analysis. Greenhill also made judgments as to the relative comparability of the various valuation parameters with respect to those companies. Greenhill’s analysis was based on publicly available data and information for the selected companies, including information published by FactSet Research Systems Inc. and public filings, the TSYS forecasts and the Global Payments forecasts.

For each of the selected companies, Greenhill compared financial information and reviewed, among other information:

 

   

The ratio of enterprise value (which we refer to in this section of this joint proxy statement/prospectus as “EV”) which was calculated as fully diluted equity value derived by multiplying the number of fully diluted outstanding shares of that company as reported in its most recent public filings by the company’s common stock closing share price on May 23, 2019, plus the book value of debt, plus minority interest, less cash and cash equivalents, less investments in unconsolidated affiliates (in each case, unaffected by any publicly announced pending merger transaction), as a multiple of adjusted EBITDA for 2019 and 2020 (in each case, unaffected by any publicly announced pending merger transaction); and

 

   

The ratio of the common stock closing share price as of May 23, 2019 (which we refer to in this section of this joint proxy statement/prospectus as “price”) divided by the estimated adjusted EPS, for 2019 and 2020 (in each case, unaffected by any publicly announced pending merger transaction, and excluding one-time items and amortization).

 

103


Table of Contents

From these analyses, based on its professional judgment and experience, Greenhill selected ranges of multiples it deemed most meaningful for its analysis. The multiple for each company used in the TSYS and Global Payments whole company comparisons and the multiple ranges resulting from these analyses are summarized below:

 

     Metric  
Selected Company    2019E
EV/Adjusted
EBITDA
     2020E
EV/Adjusted
EBITDA
     2019E
Price/Adjusted
EPS
     2020E
Price/Adjusted
EPS
 

Worldpay, Inc.

     18.1x        16.0x        21.4x        18.3x  

First Data Corporation

     10.7x        9.9x        11.1x        9.7x  

EVO Payments, Inc.

     18.1x        15.9x        48.4x        37.9x  

Fidelity National Information Services, Inc.

     12.9x        12.2x        14.3x        12.9x  

Fiserv, Inc.

     14.7x        13.6x        20.5x        18.4x  

Green Dot Corporation

     9.8x        7.7x        16.9x        12.7x  

FleetCor Technologies, Inc.

     17.6x        15.6x        22.8x        19.8x  

WEX Inc.

     15.5x        13.7x        20.9x        18.2x  

For Reference

           

Global Payments(1)

     16.7x        15.0x        25.1x        21.4x  

 

(1)

The multiples for Global Payments were not used in the TSYS or Global Payments whole company comparisons. Such multiples were provided only for reference in connection with the analysis described below under “—Sum of the Parts Analysis”. Multiples for Global Payments in this analysis were derived using estimates provided to Greenhill by Global Payments and approved for its use by TSYS.

 

Metric    Low      High  

2019E EV/Adjusted EBITDA

     12.9x        18.1x  

2020E EV/Adjusted EBITDA

     12.2x        16.0x  

2019E Price/Adjusted EPS

     14.3x        22.8x  

2020E Price/Adjusted EPS

     12.9x        19.8x  

Greenhill applied such ranges of multiples to the corresponding TSYS forecasts and Global Payments forecasts. In the case of price/adjusted EPS, Greenhill arrived directly at the high and low implied estimated TSYS and Global Payments equity values and implied estimated per share values for the TSYS common stock and the Global Payments common stock. In the case of EV/adjusted EBITDA, Greenhill arrived at high and low implied estimated TSYS and Global Payments EVs from which Greenhill then subtracted net debt to calculate the high and low implied estimated TSYS and Global Payments equity values and implied estimated per share values for the TSYS common stock and the Global Payments common stock. Net debt amounts (taking into account equity investments and/or non-controlling interests) as of April 30, 2019 for TSYS and Global Payments were $3,536 million and $5,044 million, respectively, as provided by TSYS management and Global Payments management, respectively. The results of these analyses are summarized below:

 

($ in millions, except per share values)   TSYS     Global Payments  
    Implied Equity
Value
    Implied Share
Price
    Implied Equity
Value
    Implied Share
Price
 
Metric   Low     High     Low     High     Low     High     Low     High  

2019E EV/Adjusted EBITDA

  $ 15,618     $ 23,245     $ 87.12     $ 129.67     $ 16,895     $ 25,631     $ 107.28     $ 162.76  

2020E EV/Adjusted EBITDA

    16,168       22,403       90.19       124.98       17,992       25,282       114.25       160.54  

2019E Price/Adjusted EPS

    12,344       19,734       68.86       110.08       13,235       21,158       84.04       134.35  

2020E Price/Adjusted EPS

    12,699       19,434       70.84       108.41       14,040       21,486       89.16       136.44  

Greenhill then used the above implied estimated equity values and implied estimated per share values to calculate for each metric (1) an implied TSYS ownership percentage in the combined business utilizing the high TSYS implied equity value and the low Global Payments implied equity value, (2) an implied TSYS ownership

 

104


Table of Contents

percentage in the combined business utilizing the low TSYS implied equity value and the high Global Payments implied equity value, (3) an implied exchange ratio utilizing the high TSYS implied equity value and the low Global Payments implied equity value and (4) an implied exchange ratio utilizing the low TSYS implied equity value and the high Global Payments implied equity value. Greenhill compared these ranges to the proposed exchange ratio and resulting pro forma ownership in the combined business. The results of these analyses are summarized below:

 

     Implied TSYS Ownership
Percentage in Combined Business
    Implied Exchange Ratio  
Metric    Low TSYS /
High Global
Payments
    High TSYS /
Low Global
Payments
    Low TSYS /
High Global
Payments
     High TSYS /
Low Global
Payments
 

2019E EV/Adjusted EBITDA

     37.9     57.9     0.535x        1.209x  

2020E EV/Adjusted EBITDA

     39.0     55.5     0.562x        1.094x  

2019E Price/Adjusted EPS

     36.8     59.9 %&n