Kohlberg Kravis Roberts has continued its remarkable spending spree by agreeing one of the largest private equity deals on record, a $29 billion (€21.7 billion)take-private of listed US electronic payments business First Data.
The offer means KKR could agree over $100 billion of deals within a matter of weeks, following its recent bids for US utility TXU, US retailer Dollar General and UK heath and beauty chain Alliance Boots.
KKR has agreed to pay $34 per share for First Data, a substantial 26 percent premium over the company’s closing share price last Friday and a 34 percent premium over the average share price in the preceding month.
Under the terms of the deal, First Data will now have a 50-day ‘go-shop’ window to “actively solicit proposals” from alternative bidders.
However, it will be difficult for other parties to finance an offer since most of the big Wall Street investment banks are already lined up behind KKR. Citigroup, Credit Suisse, Deutsche Bank, HSBC, Lehman Brothers, Goldman Sachs and Merrill Lynch are advising the buyout firm and providing debt financing, while Morgan Stanley is advising the vendor.
First Data plays a critical role in US retail banking, processing debit and credit card payments and operating cash machines for banks. The company has been listed since 1992, and has since increased revenues nine-fold, from $1.2 billion to $10.6 billion in 2005. Last year it spun off money transfer business Western Union, its most profitable operation, reducing the group’s turnover to $7.1 billion.
If successful, the acquisition of First Data would be KKR’s biggest ever solo deal, and the third biggest leveraged buyout to date, behind its own $45 billion acquisition of US utility TXU alongside TPG – a process which is still ongoing – and The Blackstone Group’s recent $39 billion deal for US property business Equity Office Properties.
KKR is also closing in on two other large deals: it has been granted access to the books of UK health and beauty group Alliance Boots, which at £10.1 billion (€14.9 billion; $19.9 billion) would be Europe’s largest ever buyout, and earlier this month also agreed a $7.3 billion deal for US retailer Dollar General.
Together, the four deals will total just over $100 billion.
KKR is currently raising its biggest ever fund, which is likely to close on more than $20 billion.