Global Payments Takeover Rumors Trigger Valuation Discussions! “Big Short” Bury: Real Opportunities at Fiserv (FISV.US) and PayPal (PYPL.US)

The Zhitong Finance App learned that the “big short” Michael Berry believes that the potential acquisition valuation of payment processor Fiserv (FISV.US) is between $100 and $120 per share. He also reiterated that PayPal (PYPL.US) is a “good ball”; previously there were reports that private equity was interested in its competitor Global Payments (GPN.US), making industry valuations the focus of attention.

“Opportunities in Fiserv's “" restricted area" "”

The $100 to $120 takeover scenario given by Bury means that there is 100% to 140% upside compared to Fiserv's current market price. He estimated this range by applying valuation assumptions from a potential Global Payments takeover case.

In his latest Substack post, he said: “Compared to Global Payments, Fiserv is more profitable, the target of the acquisition is only slightly more expensive, and the asset quality is better.”

He believes that the stock's struggling performance partly reflects the loss of investor confidence. He said, “Fiserv has always been in the 'no zone' due to the previous management's overly optimistic growth goals and underdisclosed Argentina's hyperinflationary earnings. This trust gap isn't easy to fix on Wall Street, even with new management.”

Bury maintained full positions and said new trading activity could bring potential returns ahead of time. “All in all, I think this situation is an opportunity,” he said. “Remember, insiders have been buying big at these low levels.”

This acquisition comparison assumes that the new owner can change strategy, cut costs, and reallocate cash flow. Berry said that for ordinary shareholders, FiServ's current transaction price is about 1.6 times its IV15 benchmark. The IV15 he refers to is the price at which he expects to achieve 15% annualized return within 15 years.

Fiserv will announce third-quarter results on Tuesday.

Global Payments takeover market questioned

Global Payments shares surged 18% last Friday following reports that Clayton Duvelier and Rice are joining forces with GTCR, its largest shareholder, to seek an acquisition. GTCR obtained 15% of Global Payments's shares through the WorldPay acquisition completed in January (enterprise valuation of US$24.25 billion). Global Payments also sold its card issuer solutions business to Fidelity National Information Services (FIS.US).

However, Bury is skeptical about Global Payments's acquisition strategy and drastically adjusted earnings. “From the perspective of a minority shareholder, I've always thought Global Payments has limited value as a serial merger and acquirer destined to continue to acquire companies with poor returns,” he said.

Even assuming an improvement in capital allocation, he offered an entry price range of $45 to $60 for controlling buyers seeking 15% annualized returns, which is about 38% to 54% lower than the current level. At that market price, he estimated that controlling buyers would get a 10% return. His valuation of $18 to $26 for FIS was about 33% to 53% lower than the previous closing price.

Still, he sees this as a potential catalyst for competitors. “However, the acquisition of Global Payments should validate the value of other traditional payment networks,” he said. It could even make them targets for acquisition.”

Optimistic about PayPal's “good ball”

Bury is still optimistic about PayPal, but he said its business is not easy to compare directly with Global Payments.

He said, “It is currently trading at about 0.80 times the IV15, which is a 'good ball' at a price of more than 50 dollars.” He claims that the size of his positions is between Kokura and normal warehouses. His bullish stance predates the latest trading speculations. In July of this year, he questioned Stripe and Advent's offer of $60.50 per share, believing that buyers taking control of PayPal should pay a higher price.

He said at the time, “$60.50 is too low. I'm not going to sell it, I think it's just an initial offer.” According to reports, Stripe and Advent abandoned the acquisition in August.

Outside of the payments sector, Bury increased its holdings of Sprouts Farmers Market (SFM.US) call options due in 2028, and JD.US (JD.US) call options due in 2029. He also added a position at BYD, calling this car company a medium position and JD's large position.