Seeking Alpha: Has A Window Opened To Acquire A Great Acquirer In Global Payments?

For the most part, the only thing I really haven't liked about the merchant acquirer/card processing space is that a lot of the leading independent players like Global Payments (NYSE:GPN), Heartland Payment (NYSE:HPY), and Vantiv (NYSE:VNTV) sported pretty eye-watering valuations and established rivals like JPMorgan (NYSE:JPM), Wells Fargo (NYSE:WFC), and Bank of America (NYSE:BAC) have all been quite keen on generating more growth from this lucrative non-banking operations.

Since last writing on Global Payments (and Heartland, for that matter), the company has delivered a few more solid quarters of constant currency growth and pretty respectable cash operating margins. Global Payments also reached a deal to acquire Heartland, and I believe investors have blanched at the steep premium that Global Payments is paying, as well as the risk that integration will be trickier than advertised. Since the time of the deal announcement, the shares have lost about one-quarter of their value.

I'm probably crazy for saying this, but I actually think this sell-off has created a window of opportunity to acquire what will become the sixth-largest merchant acquirer in the U.S. and a growing player abroad. There are most definitely real risks in integrating Global Payments and Heartland, and sector valuations are not a positive in this market environment, but I believe the combined entity should be worth closer to $57/GPN share today.

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Has A Window Opened To Acquire A Great Acquirer In Global Payments?