The Heartland–Global Payments merger
This is a second series related to the Heartland–Global Payments merger, where we discuss the background of the two companies and take a look at the MAE (material adverse effect) clause. The initial series (that should be read first) discusses the returns, rationale, and risks of the deal. You can find it in Heartland–Global Payments: Two Growing Payment Processors Merge.
Basics of Heartland
Heartland Payment Systems (HPY) is a company based in New Jersey. It provides payment processing services to merchants throughout the United States. Payment Processing is a service that handles the nuts and bolts of credit and debit card transactions. The information is passed between the merchant and the cardholder’s financial institution. They operate in two basic businesses, namely Small and Medium sized merchants (or SME) merchants and Network Services merchants, who are primarily in the petroleum industry. Heartland is being bought by Global Payments (GPN), an Atlanta-based payments processor with more of an international presence.
Heartland also provides additional services to colleges, including commerce solutions, payment processing, and higher education loan services through its Campus Solutions. Heartland also provides similar services to K-12 schools via Heartland School Solutions. Heartland Payroll Solutions handles payroll processing and tax filing services while Heartland Commerce and Heartland Marketing Solutions handle gift cards, as well as prepaid and stored value cards.
Merger arbitrage resources
Other important merger spreads include the deal between Baker Hughes (BHI) and Halliburton (HAL). For a primer on risk arbitrage investing, read Merger arbitrage must-knows: A key guide for investors.
Investors who are interested in trading in the financial sector could look at the S&P SPDR Financial ETF (XLF).