Bloomberg has reported that Kohlberg Kravis Roberts & Co. agreed to buy First Data Corp., the world’s largest processor of credit-card payments, for about $25.6 billion in the second-biggest leveraged buyout ever.
KKR will pay $34 a share in cash for First Data, 26 percent more than the March 30 closing price, the companies said in a statement. It would be the largest LBO after the $31.8 billion takeover of Dallas-based utility TXU Corp. proposed in February by KKR and TPG Inc., formerly Texas Pacific Group.
Henry Kravis and George Roberts, New York-based KKR’s co- founders, have unveiled plans for $100 billion in purchases in the past six months, almost one-fifth of all LBOs disclosed in the period. First Data Chief Executive Officer Henry “Ric” Duques put the Greenwood Village, Colorado-based company up for sale seven months after spinning off its Western Union money-transfer unit and as he struggled to increase earnings.
“The company could be a higher-margin business, and they’re buying at a time when it’s low-margin,” said Wayne Johnson, an analyst with Raymond James & Associates in Atlanta who rates First Data’s shares’ market performance. “Three to five years is a pretty good time frame to monetize this investment.”