First Data's $750 Million Attempt to Jumpstart Growth

First Data Corp (NYSE: FDC) is struggling. In the fiercely competitive payment processing arena, rife with disruptive upstarts like Square Inc and deep-pocketed innovators like PayPal Holdings Inc, industry incumbents like First Data have found it difficult to find their footing, even as its share price has continued to rise. While several companies in this sector have significantly grown their business in recent years, First Data's revenue growth has all but stalled compared to its competitors in the payment processing industry.

In the company's 2017 first quarter, First Data reported total segment revenue of $1.7 billion, a 2% year-over-year increase. Not one of its business divisions grew revenue by more than 3% (though on a constant currency basis revenue growth was slightly higher). In its first quarter earnings presentation, the company stated it was still saddled with $18.6 billion in gross debt; undoubtedly remaining from its public spin-off from private equity group KKR in 2015. While its interest rate expenses have gone down considerably over the past few years, that's still a lot of debt for a company with a market cap of about $17 billion.

This is why it came as somewhat of a pleasant surprise when First Data announced it would be acquiring CardConnect Corp for $15.00 per share (or about $750 million) in late May.

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Source: Fool.com