Fiserv will acquire First Data Corp. for $22 billion in a payments processing deal that marks one of the biggest financial mergers in a decade and a win for private-equity giant KKR & Co.
The deal will create the world’s largest payment processor amid a wave of consolidation in that industry, which faces threats from startups such as Square Inc. and Adyen NV. The all-stock transaction values First Data at a 29 percent premium to Tuesday’s closing price.
“It will be interesting to see how combining two fairly large legacy processing companies will be done smoothly given the obvious complexities,” Sanjay Sakhrani, an analyst at Keefe Bruyette & Woods Inc., wrote in a note to clients.
The merger is the latest twist for one of the biggest take-private deals. KKR & Co. purchased First Data in a 2007 leveraged buyout, right before markets tanked.
It brought in former JPMorgan Chase & Co. executive Frank Bisignano as its chief in 2013, and returned to the public markets in 2015. KKR is supporting the deal and will own 16 percent of the combined company.
First Data jumped a record 21 percent to $21.22 at 2:57 p.m. in New York on Wednesday, while Fiserv was down 3.7 percent and KKR shares climbed 4.6 percent. The transaction has a $22 billion equity value, the companies said, and First Data has about $17 billion of debt, which Fiserv plans to refinance.
The deal is a boost for Bisignano, who had struggled to gain traction in First Data’s turnaround while grappling with a heavy debt load brought on by the KKR buyout.
The shares had climbed 9.6 percent in the more than three years since the IPO through Tuesday, compared with a 32 percent gain in the Russell 1000 Financial Services Index.
Bisignano will become chief operating officer of the combined company, which will be led by Fiserv Chief Executive Officer Jeffery Yabuki.
“We’re creating an unparalleled fintech company,” Bisignano said in a telephone interview. “What this symbolizes is how much technology the payments space can take and have and we’re going to be the leader in it.”