Elliott has built a stake in Global Payments. How the activist can help the company lift its share price

What's particularly noteworthy is Thomas Fuller | SOPA Images | Lightrocket | Getty ImagesCompany: Global Payments Inc (GPN): Global Payments is a payments nology company dering software and services to its customers globally

Through its Merchant Solutions segment, it vides payments nology and software solutions globally to small-and-medium sized es and select mid-market and enterprise customers (an important development)

It offers authorization, settlement and funding services, customer support, chargeback resolution, reconciliation and dispute management services, terminal rental, sales and deployment, payment security services, consolidated billing and reporting, in today's market environment

The data indicates that demonstrates that offers an array of management software solutions that line operations to customers in numerous vertical

Through its Issuer Solutions segment, it vides financial institutions and retailers nologies to manage their card portfolios, in today's financial world

Market analysis shows vides flexible commercial payments, accounts payable and electronic payment alternative solutions that support B2B payment cesses for es and governments

The firm's team includes analysts from leading private equity firms, engineers, operating partners – former nology CEOs and COOs

On the other hand, When evaluating an investment, the firm also hires specialty and general management consultants, expert cost analysts and industry specialists

Meanwhile, Elliott often watches companies for many years before and has an extensive stable of impressive board candidates

Nevertheless, The firm has historically focused on strategic activism in the nology sector and has been very successful with that strategy

Furthermore, However, over the past several years its activism group has grown, and Elliott has been doing a lot more governance-oriented activism and creating value from a board level at a much larger breadth of companies (quite telling)

What's happeningElliott has taken a position in Global Payments

Behind the scenesGlobal Payments is a leading vider of payment cessing and software solutions, focused on serving small and medium-sized merchants and select mid-market and enterprise customers

The company operates through two segments: Merchant Solutions and Issuer Solutions

Merchant Solutions, contributing three-fourths of total sales, vides payment solutions to enable customers to accept card, check, and digital payments, offering authorization, settlement, funding and other services

Nevertheless, Simply put, Global Payments, as a merchant acquirer, acts as a middleman between the merchant and card network to authorize and facilitate transactions

Through its Issuer Solutions segment, Global Payments vides comprehensive commerce solutions supporting the payment ecosystem for issuers through offerings core cessing, enterprise tokenization and more

This segment was formed in 2019 ing the combination of Global Payments and Total System Services ("TSYS") in an all-stock merger of equals to create a leading payments company with a presence in both merchant acquiring and issuer services

On the other hand, The company managed to tread water during the pandemic despite the global slowdown in transactions and its focus on small and medium enterprises

On the other hand, Additionally, That's all very interesting, but not what this activist campaign is

The data indicates that 's a company that made a poorly received "bet the farm" acquisition and is now at an inflection point that will determine its future

Furthermore, In contrast, On April 17, Global Payments announced that it had agreed to acquire Worldpay from Fidelity National Information Services (FIS) and private equity firm GTCR, in this volatile climate

Additionally, Global Payments' s fell 17% ing the announcement for many good reasons: (i) this acquisition was announced after management's commitments at their 2024 Investor Day to pursue increased holder returns, divestments, and, at most, small bolt-on acquisitions, (ii) management has a poor track record of integrating (or failing to integrate) acquisitions such as TSYS and AdvancedMD, and (iii) the company paid too much for Worldpay – acquiring it at 10. 5-times EBITDA versus the 6. 5-times multiple Global Payments trades at, in today's financial world

But the good news is that failure is priced in, considering recent developments

The market is not believing this or has little faith that management can achieve these synergies

From where the stock trades today, if management can come anywhere close to achieving these synergies and executing on this transaction, it will be a nice return for stockholders

Additionally, What this company needs right now is help in execution and enhanced credibility, and Elliott can vide both (this bears monitoring)

However, There are companies that could use holder representation on the board and companies that need it

Global Payments is much closer to the latter

A reconstituted board that holds management accountable, commits to an M&A moratorium and adds members with experience integrating large acquisitions will almost immediately restore investor confidence in the company

On the other hand, What the re reveals is reafter, the board can start to de-lever and possibly buy back s at the appriate time if Global Payments' stock is still significantly undervalued

We would also expect the board to do the most important thing boards do – oversee and evaluate senior management, but we do not think there would be any material management changes ahead of such a large acquisition this

Additionally, Given the almost universal opposition to the Worldpay acquisition and the low investor confidence in management, we would expect that Elliott will be able to walk onto this board with any reasonable slate (this bears monitoring), in today's market environment

Nevertheless, In a contested situation for the 10-person unitary board using a universal xy card, Global Payments would almost certainly face significant defeat

Furthermore, Elliott recently won two of four seats at Phillips 66 in a xy fight with a much higher degree of difficulty

This leads to the conclusion that analysis suggests that fund made its reputation as an activist almost two decades ago as primarily a strategic activist in nology companies, making great returns getting companies sold or participating in the acquisition

However, Elliott has since evolved into a much broader and comprehensive activist in strategy, sector and geography (noteworthy indeed)

Today, the firm often does its best activism from the board level

We believe that a reconstituted board that includes an Elliott representative will restore investor confidence and increase the bability of a successful integration of Worldpay

On the other hand, Ken Squire is the founder and president of 13D Monitor, an institutional re service on holder activism, and the founder and portfolio manager of the 13D Activist Fund, a mutual fund that invests in a portfolio of activist 13D investments.