Global Payments Stock Drops 12% After Buyout Talks Collapse
Shares of Global Payments fell sharply today as discussions for a private buyout were abandoned by CD&R and GTCR.
Global Payments, the payment processing giant, experienced a significant decline of 12% in its stock on reports that private equity firms CD&R and GTCR have abandoned their plans to pursue a buyout. This drop is a stark reversal from the 11% surge observed on October 30, when news of the potential buyout first emerged.
Previous Buyout Attempts
This is not the first time that a major player has faced challenges in securing a buyout. Earlier this year, PayPal found itself in a similar situation when Stripe and Advent International withdrew their interest following a bid valuing the company at over $53 billion.
Challenges in Financing
Sources familiar with the discussions highlighted that the early-stage negotiations stalled due to difficulties in financing such a large take-private transaction. Lenders are becoming increasingly cautious about leverage in significant buyouts, as observed in the current market climate.
In contrast, PayPal is managing its financial strategies more independently. The company recently repurchased $6 billion in stock over the past year and adjusted its non-GAAP EPS guidance for 2026 from approximately $5.38 to $5.60. With a forward P/E ratio around 10x, these buybacks are having a considerable impact on its financial standing.
Financial Outlook for Global Payments
An analysis by TIKR, which tracks 36 analysts evaluating Global Payments, indicates varying recommendations regarding its stock. The general sentiment could have changed positively had the buyout talks progressed.
Currently, Global Payments is focused on serving merchants, particularly after acquiring Worldpay from FIS while selling its issuer business to the same company. Analysts project that the normalized EPS will rise from $12.22 in 2025 to $19.07 in 2028, representing a growth of over 50% as the Worldpay integration becomes successful.
Despite this optimistic forecast, the forward P/E ratio of Global Payments stands at 6.5x, significantly lower than its five-year average of 9.2x, reflecting a perceived undervaluation in the market. At its current trading price, the ratio is even below 6x.
Analysts' Insights
Prior to the cessation of buyout discussions, several analysts, including those from Barclays, Bernstein, Cantor Fitzgerald, and Mizuho, had raised their price targets for Global Payments, projecting values between $97 and $115—a target that is 20% above the current price.
Ultimately, it appears that Global Payments may not necessarily require a private equity buyer to thrive. The market is currently underestimating the potential for earnings growth at these price points. However, investors remain alert, as successful integration of Worldpay is critical for realizing these projected gains. Global Payments’ fourth-quarter results, scheduled to be released early next year, will provide crucial insights into this integration process.