Payments Giant FIS to spin off and sell Worldpay to remain competitive.

A $43 billion acquisition that Fidelity National Information Services Inc. executed four years ago is being undone by the banking and payments powerhouse, according to people familiar with the situation.

According to the sources, FIS intends to pursue a tax-free spin-off of its merchant division, which handles payments for businesses. The spin-off will take many months to complete, and during that time, the sources noted, FIS will also consider any takeover proposals for the division.

The majority of FIS’s merchant business is made up of Worldpay, which it acquired in 2019 for $43 billion. FIS shares have lost more than half of their value since then, leaving the business with a market capitalization of $45 billion as it battles to remain competitive with established and up-and-coming providers of financial technology that promise better and more affordable services.

The sources claimed that the Jacksonville, Florida-based company might make the spinoff announcement as early as next week, revealing the findings of a strategic assessment it started in December in response to pressure from hedge funds D.E. Shaw and JANA Partners.

The sources requested anonymity in order to discuss private discussions and stressed that no transaction is certain.

FIS chose not to respond. On February 15, the business is expected to release its fourth quarter earnings.

In response to investor pressure to become smaller and concentrate on improving profitability in some of the key industries, a number of conglomerates, notably General Electric Co, Johnson & Johnson, Kellogg Co, and Toshiba Corp, have split up their sprawling companies.

Following its division, FIS would retain its capital markets segment, which serves investment firms, as well as its core processing systems business, which facilitates transactions between banks and other financial institutions.

About 30% of the company’s revenue comes from merchant solutions, 46% from its banking solutions division, and the rest from capital market solutions.