First Data agrees to buyout led by KKR for $27 billion

Credit card transaction processor First Data Corp. said Monday that it was being acquired by an affiliate of private equity firm Kohlberg Kravis Roberts & Co. for about $27 billion in what would be among the richest private takeovers in the U.S.

The proposed deal comes amid a flurry of activity by buyout groups to take public companies private.

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

KKR agreed to pay $34 a share for First Data, a premium of about 26% over First Data’s closing price Friday. First Data shares rose $5.55 to $32.45 on Monday.

Under the agreement, First Data can solicit third-party proposals over the next 50 days, and the company said it planned to actively do so.

The company has about 754 million common shares outstanding, which would be worth $25.6 billion at the offered price. In addition, the company said unvested stock options and restricted stock awards that would vest upon a takeover would add about $1.4 billion to what the buyer would pay for First Data stock, boosting the deal’s value to about $27 billion.

The buyer would also assume about $2 billion in First Data debt, raising the value of the transaction to about $29 billion, the company said.

KKR member Scott Nuttall praised First Data’s management team and said KKR looked forward to working with it.

First Data’s board has approved the transaction, but it requires shareholder and regulatory approval as well as other customary closing conditions.

The deal is not contingent on financing by the investor group, and First Data expects the transaction to be completed by the end of the third quarter.

First Data, based in Greenwood Village, Colo., has become one of the leading electronic payment processors since it was spun off by American Express and went public in 1992.

With more people shifting from cash and checks to credit and debit cards, First Data has potential to grow. In February, the company said it was closing a check and money order division for financial institutions to focus on its other operations.

In 1995, First Data merged with First Financial Management Corp., whose holdings included Western Union. First Data spun off Western Union in September.

First Data combined with Concord EFS in a $6.6-billion deal in 2004 that gave it control of the STAR network, a debit-card and automated-teller-machine network used at banks, retail stores and other businesses.