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First Data (FDC) to Snap Up Leading Brazilian EFT Brand

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First Data Corporation yesterday announced that it will acquire Software Express, a well-known electronic funds transfer (EFT) brand in Brazil, serving more than 100,000 merchants. The financial terms of the deal have been kept under wraps.

How Will First Data Benefit?

The acquisition should help First Data gain more traction in electronic payments transactions. The company will be in a position to support all sizes of retail clients, cards schemes, financial institutions and telecoms.

“We will be able to expand the current Software Express portfolio within First Data’s global platforms, and in 2019, the two companies expect to process more than 15 billion transactions in Brazil,” said Gustavo Marin, executive vice president of First Data Latin America.

We observe that First Data shares have gained a massive 51.2% year to date, significantly outperforming the 35% rally of the industry it belongs to.

The Bigger Picture

First Data itself is getting acquired by Fiserv , a transaction that is expected to be completed in the second half of this year.

One of the targeted strategic benefits of this acquisition is to be able to develop complementary technology capabilities and solutions to enhance client value and increase market differentiation.

That said, Software Express’ acquisition by First Data seems to be a step toward this goal as Software Express has a broad portfolio of technology solutions that include multi-acquirer EFT, multi-acquirer EFT POS, reconciliation, a payments gateway, and automated recurring payments, among others.

Zacks Rank & Stocks to Consider

Currently, First Data is a Zacks Rank #3 (Hold) stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Some better-ranked stocks in the broader Zacks Business Services sector are Omnicom (OMC - Free Report) and Automatic Data Processing (ADP - Free Report) , each carrying a Zacks Rank #2 (Buy). Long-term expected EPS (three to five years) growth rate for Omnicom and Automatic Data Processing is 6.9% and 12.8%, respectively.

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