First Data Corp’s USD 29 billion acquisition by an affiliate of Kohlberg Kravis Roberts & Co. (KKR) will result in shareholders receiving USD 34 per share in cash.
First Data Corp’s USD 29 billion acquisition by an affiliate of Kohlberg Kravis Roberts & Co. (KKR) will result in shareholders receiving USD 34 per share in cash.
The agreement was unanimously approved by the First Data Board of Directors based upon the recommendation of the Strategic Review Committee comprised of three independent directors. Under the agreement, First Data shareholders will receive USD 34 in cash for each share of First Data common stock they hold, representing a premium of approximately 26% over First Data’s closing share price of USD 26.90 on March 30, 2007 and a premium of approximately 34% over the average closing share price during the previous 30 trading days.
Chairman and Chief Executive Officer of First Data Ric Duques said: ‘We are pleased to reach this agreement with one of the world’s largest and most successful private equity firms. We believe that current market conditions present an exceptional opportunity to fulfill our commitment to maximize the value of First Data by delivering an immediate cash premium to our shareholders.’
KKR Member Scott Nuttall added: "Under the direction of a world-class management team and with the strong support of its committed employees, First Data is at the forefront of the worldwide trend toward electronic payments. We believe that through continued investments in its technology, people and customer relationships, First Data will build on its history of innovation and industry leadership. We look forward to working closely with First Data’s management team and clients to grow the franchise in the years ahead."
Since its initial public offering in 1992, First Data has grown from USD 1.2 billion in annual revenue to USD 10.6 billion prior to the spin-off of Western Union and USD 7.1 billion post spin-off. An investment in the company’s IPO, adjusted for the recent spin-off of Western Union, would have generated 18 percent compounded annual returns for First Data’s shareholders versus 9 percent for the S&P 500.
First Data intends to tender for all of its outstanding bonds in conjunction with closing.
Under the merger agreement, First Data may solicit proposals from third parties during the next 50 days. In accordance with the agreement, the Board of Directors of First Data, through its Strategic Review Committee and with the assistance of its independent advisors, intends to actively solicit proposals during this period. First Data advises that there can be no assurance that the solicitation of proposals will result in an alternative transaction. First Data does not intend to disclose developments with respect to the solicitation process unless and until its Board of Directors has made a decision.
Completion of the transaction, which is subject to the approval of First Data shareholders, regulatory approvals and customary closing conditions, is expected by the end of the third quarter of 2007. The transaction is not conditioned upon receipt of financing by the investor group.
Citigroup, Credit Suisse, Deutsche Bank, HSBC, Lehman Brothers, Goldman Sachs and Merrill Lynch have committed to provide debt financing for the transaction subject to customary terms and conditions, and are acting as financial advisors to KKR. Simpson Thacher & Bartlett LLP is acting as legal advisor to KKR.
Morgan Stanley & Co. is serving as sole financial advisor to First Data and Evercore Group LLC is serving as financial advisor to the Strategic Review Committee of the First Data board of directors. Sidley Austin LLP is acting as legal counsel to First Data. Sullivan & Cromwell LLP is acting as legal counsel to the company’s independent directors.
First Data Corp.is a leading provider of electronic commerce and payment solutions for businesses worldwide. Serving 4.9 million merchant locations, 1,900 card issuers and their customers, the company’s portfolio of services and solutions includes merchant transaction processing services; credit, debit, private-label, gift, payroll and other prepaid card offerings; fraud protection and authentication solutions; electronic check acceptance services through TeleCheck; as well as Internet commerce and mobile payment solutions. The company’s STAR Network offers PIN-secured debit acceptance at 2 million ATM and retail locations.
