In 2015, Fidelity Information Services (FIS) acquired SunGard, expanding its top line nearly 50.0% and entering the capital markets and asset management businesses (XLF). The acquisition, which closed in November 2015, isn’t expected to hit net profitability for some time due to the debt load created by the deal.
SunGard has almost tripled FIS’s debt ratios, while its ability to generate cost and revenue synergies remains to be seen. With SunGard, FIS stands to take in more than $9.0 billion in annual revenue. SunGard is expected to boost FIS’s revenues 40.0%.
Gary Norcross, president and chief executive officer of FIS, said, “At FIS, we are driving innovative solutions and delivering high-quality client experiences that move our clients’ business forward each and every day. This acquisition creates one of the broadest sets of technology assets and market expertise in the industry, and allows FIS to present new opportunities to our existing client base as well as to financial services markets that we have not historically served.”
SunGard, with its strong pipeline, is expected to create opportunities for cross-selling FIS products. Once SunGard is completely absorbed, FIS is expected to surpass its rival since FIS should be able to expand beyond North America in the core account processing market to become a global software vendor to the broader financial services industry (XLF). The acquisition could also help FIS gain an edge over its peers Fiserv (FISV) and Jack Henry & Associates (JKHY).