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Research Market strategy
by Swissquote Analysts
Morning News

La fintech FIS va acquérir Worldpay pour 43 mds de dollars, dette comprise

Topic of the day

Fidelity National Information Services Inc. said Monday it has agreed to acquire Worldpay Inc. for about $35 billion in cash and stock, creating a global payments giant in a bid to reach more customers as merchants and their clients complete an increasing number of transactions online. The deal marks one of the biggest transactions in the fast-consolidating payments sector that is under pressure to cut costs, develop new products and add customers. It comes at a time of greater regulatory scrutiny and rising competition from technology startups that are squeezing fees. In 2017, Worldpay Group PLC, the predecessor company of Worldpay, was itself acquired by U.S. rival Vantiv Inc. for GBP8 billion ($10.6 billion). For Fidelity National Information Services, widely known as FIS, the acquisition would also be by far its biggest bet since it acquired rival financial software company Sungard for $5.1 billion in cash and stock in 2015. Under the deal, shareholders of Worldpay, which is based in Cincinnati, Ohio, shareholders will receive 0.9287 in FIS shares and $11.00 in cash for each share of Worldpay. That values Worldpay's shares at $112.12 each, representing a takeover premium of almost 14% to Worldpay's stock price based on Friday's closing prices for each company in New York. FIS shareholders will own about 53% of the company and Worldpay shareholders will own about 47%. The companies said the combined entity expects to generate $500 million in additional revenue and annual cost cuts of about $400 million through combining their one-stop shop services to process online and in-store payments and manage transactions in multiple currencies. The combined entity, which expects to have annual revenue of about $12.3 billion, also will offer services to manage fraud and advanced data analytics, the companies said.

Swiss stocks

The SMI gained 0.1 percent to 9,497 points Monday, with the market lacking direction. Bank stocks were buoyed by the weekend confirmation of merger talks between Deutsche Bank and Commerzbank, which fired hopes of sector consolidation, and by rating agency Moody’s confirmation of its outlook for Italy’s creditworthiness, as some traders had feared a downgrade. This was seen as positive news for all banks invested in Italian bonds. Credit Suisse rose 2.4 percent, UBS 1.2 percent and Julius Baer 1.0 percent, occupying three of the four top places in the index. Novartis slid 0.6 percent, unable to profit from news of optical health subsidiary Alcon’s takeover of US liquid-filled-lens maker Powervision for USD 285 million. Among third-tier stocks, Evolva slumped 7.2 percent on news that it had received a request from US Environmental Protection Agency for further information to complete review of a study on its active ingredient against ticks and mosquitoes.

International markets

Europe

European markets were modestly higher, with gains led by the banking sector after German lenders Deutsche Bank AG and Commerzbank AG announced Sunday that they had entered merger discussions. The Stoxx Europe 600 edged up 0.3%, buoyed by gains in shares of banks and basic resources companies.

United States

The S&P 500 rose intraday as investors looked ahead to key updates this week from major central banks. The broad index added 0.3%, building on gains after closing out its best week since November. The Nasdaq Composite advanced 0.2% and the Dow Jones Industrial Average rose 30 points, or 0.1%, to 25878. The Federal Reserve and the Bank of England are both expected to hold interest rates steady at the conclusion of their meetings this week. Ahead of the rate decisions, fund managers and analysts say they will be looking for clues on how long officials think they will hold rates steady while gauging the softening in the global economy. "How long this pause will last is what the market is after," said Esty Dwek, senior investment strategist at Natixis Investment Managers. Signals from the Fed that rates would likely stay steady have helped stocks bounce higher since January. "We expect a stabilization in growth, not just in the U.S. but also in major economies, which means that there might be one hike this year," Ms. Dwek said. Industrial shares lagged behind the S&P 500. Boeing slid 2.1%, keeping the Dow in check, following a Wall Street Journal report that federal prosecutors and Transportation Department officials were scrutinizing the development of the company's 737 MAX jetliners. Marriott International jumped 1.6% after the company said it was planning to open more than 1,700 hotels over the next three years.

Asia

Asian shares mostly fell in muted trading as investors there awaited the Federal Reserve meeting Wednesday. The NIkkei edged lower by 0.08%, while in China the CSI 300 slid 0.46%.

Bonds

U.S. government-bond prices edged lower, but yields remained near the bottom of their recent range as investors looked ahead to this week's Federal Reserve meeting. The yield on the benchmark 10-year U.S. Treasury note settled at 2.605%, compared with 2.594% Friday. Yields, which rise when bond prices fall, barely budged in overnight trading after falling last week in response to weaker-than-expected data on U.S. inflation and manufacturing activity.

Analysis

CS rises the Nike target to 100 (90) USD – Outperf.
Barclays rises the Lufthansa target to 18,70 (17,20) EUR – Underw.
CS rises the Eni target to 20,50 (19,50) EUR – Outperform

Produced by MBI Martin Brückner Infosource GmbH & Co. KG on behalf of Swissquote. All news is acquired with journalistic accuracy. No liability is assumed for delays or errors.

 
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