Global Payments Inc. said Thursday that it has completed its purchase of the Russian merchant acquirer ZAO United Card Service for $75 million — 63% of what it said it would pay when the deal was announced in September.
The discount was partly a result of the slumping global economy, which prevented the acquiring unit of ZAO United Investments from reaching certain growth milestones outlined in the deal.
Exchange rates also had a significant effect on the price, according to Paul R. Garcia, Global's chairman and chief executive; the price in Russian rubles is only slightly lower than what the Atlanta processor initially agreed to pay.
He said that ZAO is performing well given the current economic climate and gives Global a bigger profile in the Russian market.
"This acquisition is not without its challenges and it's not without those who are skeptical, because Russia is a very difficult market," Garcia said in an interview Thursday. "But I have to tell you, we are a worldwide credit card/debit card payment processor, and you can't ignore 140 million consumers. At the end of the day, we're running our company for the long term, not quarter to quarter, and I think this is a perfect time to jump into Russia."
Before the acquisition, Global had 30 employees in Russia. The head count is much bigger now, with the ZAO UCS acquisition, Garcia said, and though he said he hopes to expand further in Russia eventually, he said no other acquisitions are imminent.
During a conference call in January to discuss Global Payments' second fiscal quarter, Garcia outlined some of his plans for international expansion, describing Russia, China and India as small markets where his company could lay a foundation for future growth.
"The Russian economy, like the worldwide economy, has taken a bit of a hit," he said Thursday. "Every region has its challenges, quite frankly … but I will tell you this: the growth opportunity in Russia, I would put up against just about any market, with maybe the exception of China. The opportunities in Russia for growth are unbelievable."