Getting It Done: KKR Wraps Up First Data Buy
September 24, 2007
Kohlberg Kravis Roberts & Co. completed its $29 billion acquisition of credit card transaction processor First Data Corp., marking an auspicious development for the New York private equity firm and the buyout industry in one of Wall Street’s most closely scrutinized leveraged acquisitions.
Greenwood Village, Colo.-based First Data announced the transaction’s closing early Monday afternoon, affirming that KKR will pay $34 per share for First Data’s stock. The company’s shares will cease trading on the New York Stock Exchange by the end of Monday.
KKR representatives did not immediately return calls seeking comment. But in a statement KKR member Scott Nuttall said First Data has “a solid foundation of strong financial performance, a market leading position” and a long list of global clients. The deal’s closing represents a glimmer of hope in the LBO market, according to Greg Peterson, a private equity partner at PricewaterhouseCoopers. “Sellers, buyers and bankers are continuing to talk and work their way through negotiating terms,” he says.
That, he said, was a positive sign since buyout investors are expected to have a tough time securing much in the way of new LBO financing until banks work through a backlog of pending billion-dollar buyouts.
The closing followed a week of intense brokering for the first $5 billion tranche of a $13 billion loan package supporting First Data's debt syndication effort, which is being managed by Citigroup, Credit Suisse, Deutsche Bank, HSBC, Lehman Brothers, Goldman Sachs and Merrill Lynch. The first $5 billion tranche received strong investor demand, one credit market source said.
As part of First Data’s deal, former MCI chief executive Michael Capellas was named CEO of First Data. He replaces CEO Ric Duques who had served as chairman and CEO since November 2005. In addition, First Data commercial services division president Edward Labry will oversee the company’s US operations, which will be combined with First Data's financial institution services businesses.
A First Data spokesman said the corporate reorganization was part of a strategic effort to become more efficient and allow the company to become more customer focused. He declined to comment on the company’s debt syndication, one of Wall Street’s most closely watched leveraged buyouts since the credit market retrenchment took hold this summer.
Shareholders of First Data, a company with a $25.6 billion market capitalization, approved the transaction on July 31.
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