Firm wants First Data

If accepted, the deal would be worth $29 billion

If accepted, the deal would be worth $29 billion

April 03, 2007|by TAMELA BAKER

HAGERSTOWN - A $29 billion buyout agreement announced Monday brought a spike of more than $5 per share in First Data Corp. stock prices.

If approved, the deal could be the second largest private takeover in U.S. corporate history.

But even if it is approved, the buyout shouldn't have a significant impact on the corporation's operations, and it likely won't be completed until September, a company spokesman said.

"It's business as usual," said Colin Wheeler, vice president for corporate communications in First Data's Denver headquarters. "We don't anticipate any significant changes."

First Data Merchant Services is one of Washington County's largest employers, with about 2,000 employees on its local payroll. The company cut 110 jobs at its Hagerstown facility last week, but Wheeler said that cut was unrelated to the buyout announcement.


In the agreement announced Monday, an affiliate of Kohlberg Kravis Roberts & Co., a private equity firm, will pay First Data shareholders $34 for each share of common stock they hold, Wheeler said. There are 754 million shares outstanding, Wheeler said.

Kohlberg also will assume some of First Data's debt, and vested stock options that would vest upon a takeover would bring the total value of the transaction to $29 billion.

First Data reported its closing share price at $26.90 on Friday. Its closing price Monday was $32.45.

The agreement allows First Data to solicit proposals from third parties for 50 days. Completion of the sale is contingent on regulatory approvals as well as approval by First Data shareholders.

If the transaction is approved, it is expected to be completed by the end of the third quarter, Wheeler said, putting the completion at the end of September.

Several lenders, including Citigroup, Credit Suisse, Deutsche Bank, HSBC, Lehman Brothers, Goldman Sachs and Merrill Lynch have agreed to provide debt financing for the transaction, according to a news release posted on First Data's Web site.

"First Data is at the forefront of the worldwide trend toward electronic payments," Kohlberg's Scott Nuttall said in the release. "We believe that through continued investments in its technology, people and customer relationships, First Data will build on its history of innovation and industry leadership. We look forward to working closely with First Data's management team and clients to grow the franchise in the years ahead."

That statement was reassuring to Timothy R. Troxell, executive director of the county's economic development commission. While his local contacts at First Data are not involved in the decision-making process, Troxell said "we hope it's gonna be a good thing."

He said First Data is trying to place some of those workers who lost their jobs last week in current openings at the Hagerstown facility.

Citigroup has been in touch with First Data as well, and Troxell said his department put First Data in touch with a firm closer to Baltimore that has about 200 openings.

"It's a multi-team effort," Troxell said.

The proposed buyout would rank behind another proposed $32 billion buyout of the Texas utility TXU Corp. by a group that includes Kohlberg and Texas Pacific Group. If that deal is completed, it would be the largest private takeover in U.S. corporate history.

Little local change expected

While First Data Corp. might be acquired by a private equity firm in September, corporate officials don't expect the $29 billion transaction - one of the biggest in U.S. corporate history - to significantly change the company's operations. First Data spokesman Colin Wheeler said he expects "business as usual," and that the 110 jobs cut in Hagerstown last week were "a separate issue."

Although local First Data managers are not involved in the transaction, Timothy R. Troxell, executive director of the Hagerstown-Washington County Economic Development Commission, said he's hopeful the merger will be "a good thing."

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