The all-stock transaction creates a payments giant serving 3.5 million small-to-medium-sized merchants and 1,300 financial institutions in more than 100 countries.
The marriage of Global Payments (GPN) and Total System Services (TSS), which is also known as TSYS, marks the third big takeover in the payments industry so far this year as companies adapt to an increasingly cashless world.
Analysts have said joining forces could allow the companies to bypass payments networks by routing purchases directly to banking systems.
Global Payments and Total System Services described the deal as a "merger of equals." However, Global Payments shareholders would own 52% of the new entity, which will retain the Global Payments name.
The transaction calls for Total System shareholders to receive $119.86 per share, marking a 20% premium to the Columbus, Georgia-based company's closing price on May 23 — the day before reports of a potential deal broke.
The payments world has been subject to a flurry of major deals as traditional players bulk up to deal with competition from tech players such as Square (SQ) and PayPal (PYPL).
In January, fintech company Fiserv (FISV) inked a $22 billion deal to acquire payment processor First Data (FDC). And in March, Fidelity National Information Services (FIS) revealed a transaction to acquire Worldpay (WP) valued at $43 billion including debt.
Global Payments stressed that the combined company will have exposure to "some of the fastest growing digital payments trends" in some of the hottest markets thanks to TSYS' issuer and consumer solutions businesses.
"The combination of Global Payments and TSYS establishes the leading pure play payments technology company," Global Payments CEO Jeff Sloan said in a statement.
The two companies will process more than 50 billion transactions a year and lay claim to a sales force of more than 3,500 employees around the world.
After the deal closes, Sloan will serve as the CEO of the combined company. Troy Woods, who currently serves as chairman, president and CEO of Total System Services, will be the new company's chairman.
The combined company will have dual headquarters in Columbus and Atlanta — where Global Payments is based. The board and executive leadership team will be split equally between the two companies.
And the new entity is expected to generate about $2.5 billion of adjusted free cash flow and maintain a strong balance sheet with an investment grade credit rating.
The companies said the transaction, which is expected to close by the end of 2019, will immediately add to the bottom line. They envision at least $300 million in cost reductions, including through eliminating "duplicative" corporate and operational roles. And another $100 million of revenue synergies are anticipated through cross-selling complimentary products.
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