Credit card processor company purchased by KKR
By Jeremy M. Simon | Published: May 10, 2007
Private equity firm Kohlberg Kravis Roberts & Co. will buy credit-card and payments processor First Data Corp. in a deal valued at approximately $29 billion, First Data announced on April 2, 2007.
Under the terms of the agreement, First Data shareholders will receive $34 in cash for each share of First Data. That offer represents a 26 percent premium over the First Data's closing price of $26.90 on March 30.
The deal was approved by First Data's board, with completion of the merger subject to approval of First Data shareholders and other regulatory approvals, and is forecast to take place by the end of the third quarter 2007, according to the credit card processor.
First Data has about 754 million shares outstanding, which would make the equity value of the acquisition worth around $25.6 billion.
First Data processes credit card, debit card and ATM transactions, as well as checks. In 2006, the company reported net income of $1.51 billion on revenue of $7.08 billion.
In 1992, First Data was split off from American Express as an information-processing firm that would handle billions of credit card and other transactions for third parties. Over recent years, it has struggled to organize its global, commercial and retailer processing divisions in a convincing manner, alongside upheaval in the CEO position.
As are the financial institutions that issue credit cards, credit-card processing firms are experiencing a slowdown in growth amid saturation in the credit card industry.
Meanwhile, major banks are handling some of their own credit card processing with increasing frequency as they work to trim expenses. First Data has stated in February that three of its bank customers, including Wells Fargo & Co., were bringing some of their debit-card processing in-house. First Data left the other two banks unnamed.
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