In 4Q15, Fidelity Information Services (FIS) acquired SunGard, expanding its top line by nearly 50% and entering the capital markets and asset management businesses (XLF). This deal, which closed in November 2015, is expected to impact FIS’s net profitability for some time due to the debt load created by this acquisition. SunGard has almost tripled FIS’s debt ratios, while its ability to generate cost and revenues synergies still remains to be seen.
With SunGard, FIS stands to realize more than $9 billion in annual revenue. Among its rivals, Fiserv (FISV) (JKHY) booked $5.2 billion in revenues in 2015 while DST Services generated $2.8 billion. SunGard is expected to boost FIS’s revenues 40%.
SunGard, with its strong pipeline, is expected to create opportunities for cross-selling FIS’s products. Once SunGard is completely absorbed, FIS is expected to surpass its rival, as it would enable FIS to expand beyond North America in the core account processing market to become a global software vendor to the broader financial services industry.