Payments processor FIS to sell stake in merchant unit to GTCR for $11.7 billion

(Reuters) -Fidelity National Information Services is selling a majority stake in its merchant business to private equity firm GTCR, the payments processor said on Thursday, in a deal that will fetch $11.7 billion.

The deal valued the unit that processes transactions for companies at $18.5 billion, including $1 billion contingent on GTCR's returns exceeding certain targets.

FIS said it will retain 45% of the unit that accounted for about 30% of its overall revenue.

The company built its merchant business through a $43-billion purchase of Worldpay in 2019. But new financial technology startups ate into its market share, forcing FIS to consider a spin-off in February after taking a $17.6 billion write-down.

The deal with GTCR, the largest in the history of the private equity firm, will help FIS to undo its soured acquisition of Worldpay.

The breakup would leave FIS with a core processing systems business, enabling transactions among banks and other financial institutions, as well as its capital markets unit that serves investment firms.

FIS's banking technology arm accounts for about 46% of revenue and capital markets the rest.

As part of the deal, the private equity has committed an additional investment of up to $1.25 billion in Worldpay.

Reuters had earlier this week reported that GTCR was in advanced talks for a majority stake in the merchant business.

Charles Drucker, former CEO of Worldpay, will lead the merchant business after the spinoff, FIS said. Its shares were up nearly 1% in premarket trading.

(Reporting by Niket Nishant and Manya Saini in Bengaluru; Editing by Arun Koyyur)