"Rivers know this: There is no hurry."
-A.A. Milne
August 13,2015
FIS Agrees to Buy SunGard for $9.1 billion
martinwolf Transaction Analysis
Financial Information
- Total Transaction Size: $9.1 billion
- EV/LTM Revenue: 3.2x
- EV/LTM EBITDA: 15.5x
Transaction Facts
- Fidelity National Information Services (NYSE:FIS), a financial services provider for banks, announced Wednesday that it had agreed to acquire financial software company SunGard for $9.1 billion in cash, stock and the assumption of SunGard’s debt, which FIS expects to refinance.
- SunGard came under private ownership in 2005, when a consortium of private equity firms including KKR & Co. (NYSE:KKR), Blackstone Group (NYSE:BX), Bain Capital, Silver Lake, TPG, Providence Equity Partners and the buyout arm of Goldman Sachs (NYSE:GS) paid more than $11 billion for the company.
- The transaction ends plans by SunGard’s private equity owners to take the company public. Earlier this year, the Wall Street Journal reported that the company had tapped underwriters, aiming to raise around $750 million with a target market value of about $7 billion.
- Fidelity National Information Services’ share price was up more than 8 percent Wednesday on news of the transaction.
Too Big to Fail?
- The Big Gets Bigger: SunGard, a private company with public debt, reported annual revenue of $2.8 billion in 2014 with more than 13,000 employees. Once it is integrated with Fidelity National Information Services, the combined company will have more than $9.2 billion in annual revenue with more than 55,000 employees.
- Trendsetter: SunGard’s original 2005 acquisition helped accelerate a string of major transactions featuring collaborations by firms that could not afford such a large transaction on their own. But involving so many firms made leadership difficult, and such “club deals” are rare today.
- Past-Due: SunGard’s private equity owners maintained their presence beyond the typical 5-year period after the financial crisis severely impacted banks, SunGard’s customers. In recent years, they have broken SunGard into parts, raising money and priming the company for a transaction like this one. The remainder being sold to FIS – the financial software business and a fraction of its education operations – accounts for just over 50 percent of SunGard’s 2005 revenue.
- Modest Returns: According to media sources, private equity investors will most likely be realizing returns on their equity investments of 1.5 to 1.6x. Private equity firms have turned to payment processing business in the past as their recurring revenue provides a stable cash flow to pay down debt.
For more information about this transaction, click here to read the press release. martinwolf was not the advisor in this transaction.
