US credit card firm falls to KKR

Credit card firm First Data has agreed to be bought by KKR

First Data Corp, one of the world’s largest credit card payment processors, is the latest firm on private equity companies’ shopping list.Kohlberg Kravis Roberts (KKR) will pay $34 (£17.20) in cash for each share of First Data stock, a 26% premium over its share price close on Friday.

If successful, the deal, worth about $29bn, will be the second biggest buy-out by private equity.

The $45bn paid for US utility TXU in February holds the record so far.

Agreed

First Data’s board of directors has unanimously agreed the acquisition, which is subject to the approval of the Colorado-based firm’s shareholders and regulatory approvals.

The deal is expected to be approved by the end of the third quarter.

“We believe that current market conditions present an exceptional opportunity to fulfil our commitment to maximise the value of First Data by delivering an immediate cash premium to our shareholders,” Ric Duques, chairman and chief executive officer of First Data, said.

Under the merger agreement, the company may solicit proposals from third parties during the next 50 days.

Since its initial public offering in 1992, First Data has grown from $1.2bn in annual revenue to $10.6bn before the spin-off of Western Union and $7.1bn after the spin-off.

As private equity competes for ever-larger deals, borrowing greater amounts of money to fund them, KKR is currently ahead of the pack.

The influential US investor was involved in a consortium behind the buyout of the Texan power giant, TXU.

It is currently behind a potential £10bn takeover of Alliance Boots and has also been eyeing up Sainsbury’s.