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Investing.com -- Shift4 Payments reported stronger-than-expected fourth-quarter earnings, but its shares tanked roughly 8% at Wednesday market open as it announced a $2.5 billion acquisition of Global Blue Group Holding Ltd (NYSE:GB). Shares of Global Blue surged more than 18%.
The payment processing firm posted adjusted earnings per share of $1.35 for the quarter, surpassing analysts’ estimates of $1.13. Revenue came in at $887 million, well above the consensus forecast of $406.93 million.
Shift4 said it had agreed to acquire payments provider Global Blue for $7.50 per share in cash, a 15% premium to Global Blue’s last closing price. The deal values Global Blue at approximately $2.5 billion in enterprise value.
As part of the transaction, Global Blue shareholders Ant International and Tencent Holdings Ltd (HK:0700) plan to remain investors in the combined company and explore strategic partnerships with Shift4. The collaboration is expected to expand Shift4’s reach in global e-commerce, including the distribution of Alipay+ and Weixin Pay across its payment network.
RBC Capital Markets analysts said the acquisition "likely accelerates significant international market expansion, particularly in the retail vertical."
The acquisition, unanimously approved by both companies’ boards, is set to close by the third quarter of 2025, pending regulatory approvals and other conditions. Shift4 plans to finance the purchase with cash on hand and a $1.8 billion bridge loan facility.
Shift4 management said it expects Gross Revenue Less Network Fees (GRLNF) to achieve a three-year CAGR of over 25% for both revenue and adjusted EBITDA, factoring in the impact of Global Blue. However, in a more likely scenario that includes Global Blue and additional M&A, they project a CAGR above 30% for both metrics.
"We walk away incrementally positive on FOUR’s long-term outlook, especially as its founder and CEO hands over the reins to his successor," RBC analysts added, lifting their FOUR price target to $154 from $116.
Separately, Wolfe Research analysts commented:
"We see these targets as reasonable given FOUR’s track record of executing on acquiring and synergizing assets and its ability to continue winning share in its core verticals. If the company can hit its $1bn FCF guidance, we believe that there could be notable upside to shares relative to current levels."
Pratyush Thakur contributed to this report.