Global Payments Inc. stayed true to its name in targeting the acquisition of merchant portfolios from banks in Russia and Malta during its fiscal second quarter, but it also solidified its North American activities with a deal to purchase CyberSource's U.S. merchant-acquiring portfolio from Visa Inc.
Global Payments executives revealed the three deals Jan. 5 during an earnings conference call with analysts, calling the moves key to the Atlanta-based merchant processor's continued planned expansion this fiscal year.
The company reported a 19.6% increase in revenues for the quarter ended Nov. 30, to $530.5 million from $443.5 million during the same period in 2010. Net income rose 14.4%, to $61.2 million from $53.5 million.
U.S. revenues were up 19.5%, to $293.4 million from $245.6 million, and the total should increase significantly with the CyberSource acquisition. That deal potentially adds more than 9,000 U.S. online merchants, Jeff Sloan, Global Payments president, told analysts. Global Payments expects to complete that sale by the end of the month.
"It is a very attractive portfolio in its own right, and it really puts us in a market that we historically have been under-represented," Sloan said.
After Global Payments allocates sales-force and technology resources to the CyberSource portfolio, the company should "have a good toehold" in the e-commerce market, Sloan added.
Besides the CyberSource portfolio announcement, Paul Garcia, Global Payments chairman and CEO, noted major acquisitions in Europe that should close during the third quarter.
The company would increase its presence in Russia by acquiring more than 6,000 merchant accounts from Alfa-Bank, Russia's largest private bank by total assets, Garcia said. The acquisition would expand Global Payments' existing referral network and overall sales distribution capabilities by adding more than 20 new regions in the Russian federation, he noted.
In addition, Global Payments plans to acquire nearly 4,000 merchant accounts from HSBC Bank of Malta PLC in the Republic of Malta, Garcia said. Global Payments views Malta as a prime area for future card-payments growth mainly because of the country's prospering tourism and a government focus on increasing card-based payments, he noted.
The European acquisitions should provide extra firepower in a market that enjoyed a solid second quarter. Revenue in Europe grew 44.2% during the quarter, to $115.1 million from $79.8 million in 2010. Global Payments' business in Europe includes Russia, the Czech Republic, United Kingdom and Spain.
Despite its weak economy, Spain sparked revenue gains in Europe, Garcia said. "Spain is the toughest economy of all of them, but that business is growing at a double-digit amount," he said.
Adding salespeople has helped Global Payments gain market share in Spain, despite the 20% unemployment rate in that country, Garcia noted.
Though not a major acquisition announcement, company executives revealed Global Payments has reached an agreement with a Brazilian financial institution "as a meaningful step forward" for company business in Brazil. The company did not share details of that arrangement with analysts.
