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KKR completes acquisition of First Data

Private equity giant Kohlberg Kravis Roberts has completed the USD29bn acquisition of First Data Corporation, a specialist in electronic commerce and payments solutions, after investors re

Private equity giant Kohlberg Kravis Roberts has completed the USD29bn acquisition of First Data Corporation, a specialist in electronic commerce and payments solutions, after investors responded enthusiastically to the sale of debt securities underpinning the deal’s funding.

Under the terms of the agreement, First Data shareholders will receive USD34 per share in cash after voting to approve the transaction on July 31.

KKR has installed Michael Capellas as First Data’s new chairman and chief executive, succeeding Ric Duques, who had been the company’s chairman since 1987 and chairman since 1992 apart from a two-year break between 2003 and 2005.

In a well publicised and at time controversial corporate career, Capellas was previously chief executive of MCI, president of Hewlett-Packard and chairman and chief executive of Compaq Computer.

First Data’s US operations will be headed by Edward Labry, who had been president of the company’s commercial services division. Its international operations will be led by David Yates, previously president for the Europe, Middle East and Africa region, and will continue to focus on selling the company’s payments services to merchant and financial institution clients outside the US.

Tom Bell has joined the company as executive vice-president and chief strategy officer, taking primary responsibility for corporate strategy and innovation in the company’s high-growth areas for. He previously spent 25 years at Accenture and was a managing director in the communications and hi-tech practice.

Grace Chen Trent has joined First Data as executive vice-president for marketing and communications, with responsibility for the company’s integrated marketing, brand and communication programmes worldwide. She was most recently senior vice-president for communications at MCI.

‘First Data begins a new era as a private company,’ Capellas says. ‘The strength and experience of this new management team combined with our leading market position will serve as a critical foundation for what will be the next generation of First Data.

‘Our new simplified company structure will allow us to be more customer-focused, more innovative and faster to market with new products. Our goal is to transform from being the largest payments processor to a leading-edge technology services provider in the expanding world of electronic and mobile commerce.’

KKR’s Scott Nuttall says: ‘First Data is very fortunate to have a solid foundation of strong financial performance, a market leading position and a long list of great clients around the world.

‘We look forward to supporting Michael and the rest of the management team in the years ahead to extend that leadership position and capitalise on the worldwide trend toward electronic payments.’

First Data serves more than five million merchant locations, 1,900 card issuers and their customers with a 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; internet commerce and mobile payment solutions.

Established in 1976, KKR sponsors and manages funds that make private equity investments in North America, Europe, and Asia. The firm also sponsors KKR Private Equity Investors, a Guernsey-based permanent capital fund that invests in KKR-identified investment, and two credit strategy funds, KKR and the KKR Strategic Capital Funds, which invest in debt transactions. KKR has offices in New York, Menlo Park, San Francisco, London, Paris, Hong Kong and Tokyo.

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