Global Payments stock jumps 11% on report of CD&R and GTCR take-private bid

what happened

Global Payments stock surged 11% on Friday, its strongest one-day gain since February. Stocktwits, citing the Financial Times, reported that private equity firm Clayton Dubilier & Rice is considering a buyout of the payments processor and has joined forces with GTCR, the company's largest shareholder, on a joint offer. The paper said talks are still underway, no agreement is assured, and any transaction would likely come with a premium to the latest trading price.

The shares ended Friday at $96.84, valuing the company at $25.6 billion. William Blair kept its Market Perform rating and called the report credible, given that GTCR holds about 15% of the stock. The firm pointed to nearly $22 billion in net debt as a hurdle for a leveraged buyout, particularly if borrowing costs stay high, and estimated a possible offer near $101 a share. It put the odds of a completed deal well below even, and said that if one happens, rival indebted payments firms such as Fiserv and Shift4 Payments could face more pressure to sell.

B. Riley, which rates the stock Buy with a $194 target, sees private-equity outcomes ranging from $84 to $190 and still considers the shares mispriced. On Stocktwits, retail sentiment moved from neutral to bullish over the past day, while message volume rose to high levels.

why it matters

Takeover interest typically pulls a target's shares toward the expected offer price, so the rally reflects the premium investors are hoping for. The deal is unconfirmed, however, and heavy debt remains a real obstacle, so further moves will likely depend on whether talks turn into a formal bid.

market impact

GPN: a possible takeover premium supports the shares; Fiserv and Shift4 may face sector pressure

• ▲GPN shares pressure up — takeover hopes with a likely premium support the stock price

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