HQ, most workers likely to stay
Greenwood Village - First Data Corp. on Monday accepted a buyout offer worth $29 billion from private-equity firm Kohlberg Kravis Roberts & Co. The deal will convert Colorado's largest public company into Colorado's largest private company, lowering its public profile.
But the leveraged buyout isn't expected to cost the metro-area a corporate headquarters or a significant number of lost jobs, both parties said.
"First Data continues to maintain its headquarters in the Denver area," said First Data spokesman Colin Wheeler. "It is business as usual."
KKR offered $34 a share for First Data, a 26 percent premium to the company's closing share price of $26.90 on Friday. KKR also agreed to acquire First Data's debt and to pay out all vested stock options and restricted shares.
First Data's shares, which trade under the ticker FDC, rose 20.63 percent Monday to close at $32.45 per share.
The offer allows First Data, the country's largest processor of electronic payment transactions, another 50 days to solicit a higher bid, which the company said it will do.
The transaction is expected to close by Sept. 30, pending shareholder and regulatory approvals.
First Data currently ranks as the state's largest public company in market value, a spot it has held most of the time since relocating its headquarters to the metro area from Atlanta in 2001.
First Data employs 29,000 people worldwide, including approximately 2,000 at its corporate headquarters in Greenwood Village.
"We recognize that First Data's employees bring a wealth of knowledge and experience to the company," said David Lilly, a KKR spokesman. "We understand the company routinely examines staffing levels, but we don't anticipate any significant changes in staffing or structure at this time."
Economic-development officials said they will work to preserve the local presence the company has built over the years.
"Job one is to try and have the conversation with their leadership to see what their intentions are regarding their location here," said Tom Clark, executive vice president of the Metro Denver Economic Development Corp.
First Data will maintain its charitable foundation, created in October when the company spun off its largest subsidiary, Western Union, Wheeler said. First Data's major corporate sponsorship in Colorado was The International at Castle Pines, a professional golf tournament canceled in February.
KKR plans to dissolve the company's corporate board, which will work with KKR to find a replacement for chairman and chief executive Ric Duques, who plans to retire by August.
KKR typically keeps its acquisitions as free-standing companies, sheltering them from the demands of Wall Street while improving operations and profitability. The typical holding period is seven years, and many of its investments eventually re- emerge as public companies.
KKR's involvement should result in a stronger First Data over time, Duques reassured employees in a conference call Monday.
"The world is moving toward electronic payment and away from cash," Duques said. "First Data is positioned to lead this cashless revolution. Now is the time to make lasting improvements."
First Data will accelerate existing plans to consolidate its numerous transaction-processing platforms, he said.
Private ownership also will leave the company freer to pursue international acquisitions.
KKR, established in 1976, has invested in more than 150 transactions worth $345 billion, including 11 transactions in financial services and transaction processing worth $35 billion.
From $26 billion in invested capital, KKR has generated a $68 billion return for its institutional investors.
KKR and Texas Pacific Group recently teamed up to propose a $32 billion buyout of Texas utility TXU Corp., which could rank as the largest private takeover the country has ever seen if completed.
First Data joins Transmontaigne, Quiznos and Johns Manville on a growing list of well- known Colorado companies that have gone private in recent years.
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But the leveraged buyout isn't expected to cost the metro-area a corporate headquarters or a significant number of lost jobs, both parties said.
"First Data continues to maintain its headquarters in the Denver area," said First Data spokesman Colin Wheeler. "It is business as usual."
KKR offered $34 a share for First Data, a 26 percent premium to the company's closing share price of $26.90 on Friday. KKR also agreed to acquire First Data's debt and to pay out all vested stock options and restricted shares.
First Data's shares, which trade under the ticker FDC, rose 20.63 percent Monday to close at $32.45 per share.
The offer allows First Data, the country's largest processor of electronic payment transactions, another 50 days to solicit a higher bid, which the company said it will do.
The transaction is expected to close by Sept. 30, pending shareholder and regulatory approvals.
First Data currently ranks as the state's largest public company in market value, a spot it has held most of the time since relocating its headquarters to the metro area from Atlanta in 2001.
First Data employs 29,000 people worldwide, including approximately 2,000 at its corporate headquarters in Greenwood Village.
"We recognize that First Data's employees bring a wealth of knowledge and experience to the company," said David Lilly, a KKR spokesman. "We understand the company routinely examines staffing levels, but we don't anticipate any significant changes in staffing or structure at this time."
Economic-development officials said they will work to preserve the local presence the company has built over the years.
"Job one is to try and have the conversation with their leadership to see what their intentions are regarding their location here," said Tom Clark, executive vice president of the Metro Denver Economic Development Corp.
First Data will maintain its charitable foundation, created in October when the company spun off its largest subsidiary, Western Union, Wheeler said. First Data's major corporate sponsorship in Colorado was The International at Castle Pines, a professional golf tournament canceled in February.
KKR plans to dissolve the company's corporate board, which will work with KKR to find a replacement for chairman and chief executive Ric Duques, who plans to retire by August.
KKR typically keeps its acquisitions as free-standing companies, sheltering them from the demands of Wall Street while improving operations and profitability. The typical holding period is seven years, and many of its investments eventually re- emerge as public companies.
KKR's involvement should result in a stronger First Data over time, Duques reassured employees in a conference call Monday.
"The world is moving toward electronic payment and away from cash," Duques said. "First Data is positioned to lead this cashless revolution. Now is the time to make lasting improvements."
First Data will accelerate existing plans to consolidate its numerous transaction-processing platforms, he said.
Private ownership also will leave the company freer to pursue international acquisitions.
KKR, established in 1976, has invested in more than 150 transactions worth $345 billion, including 11 transactions in financial services and transaction processing worth $35 billion.
From $26 billion in invested capital, KKR has generated a $68 billion return for its institutional investors.
KKR and Texas Pacific Group recently teamed up to propose a $32 billion buyout of Texas utility TXU Corp., which could rank as the largest private takeover the country has ever seen if completed.
First Data joins Transmontaigne, Quiznos and Johns Manville on a growing list of well- known Colorado companies that have gone private in recent years.
business mortgage real estate revenue foreclosure investment invest stock exchange forex forex trading
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