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Global Payments, Total System have held tie-up talks, sources say

[NEW YORK] Global Payments Inc has held talks with Total System Services Inc about a potential deal, according to people familiar with the matter, in what could be the third mega-merger in the payments industry this year.

The companies have held preliminary conversations that could lead to a tie-up, said the people, who asked not to be identified because the matter isn't public. They have also discussed possible joint ventures and other ways to partner up that may not include a full-blown merger, one of the people said.

Talks are at an early stage and could fall apart, the people said.

A representative for Global Payments declined to comment, while Total System Services representative didn't respond to requests for comment.

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Global Payments shares rose as much as 6.2 per cent to a record $157.20 at 9.59 am in New York, valuing the company at about US$24.7 billion. Total System Services jumped the most in nine years to US$111.84 for a market valuation of US$19.8 billion.

Market watchers have pegged Global Payments and Total System Services as potential takeover targets or merger partners in the wake of two jumbo payments deals. Fidelity National Services Inc struck a US$34 billion deal for Worldpay Inc in March, two months after Fiserv Inc agreed to buy First Data Corp for US$22 billion.

Payments firms are pairing up to diversify and grow as consumers increasingly shy away from using cash to make purchases. While this year's merger wave in the payments industry might have exhausted the prospect for many more mega-deals, Total System Services and Global Payments could still be the exceptions, Bloomberg Intelligence analyst David Ritter has said.

Global Payments and Total System Services have complementary businesses, as they focus on different parts of the payments ecosystem.

Total System Services, based in Columbus, Georgia, is the largest third-party processor for credit-card issuers in the US, servicing about 40 per cent of the domestic card accounts of both Visa Inc and Mastercard Inc last year, according to its annual report.

Atlanta-based Global Payments is the fifth biggest merchant acquirer in the US, according to a report in March from the Nilson Report, an industry trade publication. Merchant acquirers are financial institutions that help businesses handle credit and debit card payments, among other transaction services.