EVO Payments stock is up 20% on Monday: here’s the catalyst

Shares of EVO Payments Inc (NASDAQ: EVOP) are up more than 20% on Monday after Global Payments Inc (NYSE: GPN) said it will buy the Atlanta-headquartered fintech for $4.0 billion in cash.

EVO Payments stock investors to get a 25% premium

The proposal translates to $34 a share or a 25% premium on the price at which EVO Payments stock ended last week.

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Global Payments is convinced the acquisition will expand its footprint in the existing markets and help penetrate newer ones. In the press release, its COO Cameron Bready said:

The acquisition of EVO is highly complementary to our technology-enabled strategy and provides meaningful opportunities to increase scale in our business globally.

Other than cash on hand, the multinational intends to use a “committed bank facility” to fund the acquisition. Global Payments is also offloading Netspend’s consumer assets for $1.0 billion. Its shares are roughly flat this morning.

Acquisition is expected to complete by early 2023

Both companies have already secured unanimous approval from their respective board of directors. The acquisition, though, is yet to meet other customary closing conditions, including regulatory and EVO Payments stock investors approval. Bready added:

Together with EVO, we’re positioned to deliver an unparalleled suite of distinctive software and payment solutions to our combined 4.5 million merchant locations and more than 1,500 financial institutions worldwide.

The merger is expected to complete by Q1 of 2023. It’ll likely be accretive in the first year after close and deliver run-rate synergies worth $125 million.

Also on Monday, EVO Payments said its revenue was up 13% on a year-over-year basis in its fiscal second quarter. Its quarterly net income saw an annualised growth of 66%.