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KKR takeover of First Data: the deal goes sour for JPMorgan

27 April 2007 Be the first to comment

Paul Penrose

Head of Research

Finextra

Nice gossipy piece of unsourced news from Reuters about a reputed spat between Kohlberg Kravis Roberts (KKR) and JPMorgan over the private equity firm’s proposed $29 billion takeover of First Data.

According to Reuters’ anonymous informant, the two fell out over the future of Chase Paymentech Solutions, the joint venture processor owned 51% by JPMorgan and 49% by First Data.

An offer by KKR to buy-out JPMorgan’s stake in the cash generative venture was firmly rebuffed by the investment bank, which instead bounced back with its own proposal to take on First Data’s stake.

The dispute led to high-level talks between the two behemoths and has left each side with a bad taste in its mouth, claims Reuters. In the end, KKR did the First Data deal without any advisory help or debt financing from JPMorgan.

The future of the unit is as yet uncertain, and both parties have refused to comment.

Assuming the KKR deal goes ahead, I’d expect a grudging exit from JPMorgan sometime in the not-too-distant future. KKR needs a strong supply of cash to pay down the debt used to finance its deals, while JPMorgan, for its part, cannot afford to alienate one of the big beasts of the private equity jungle for too long.

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The Finextra50 Financial Technology Index is a free-float value weighted index of the world's leading companies that provide technology-based products and services to the financial services industry. It was set at an indexed value of 100 at market close on Friday 4th May 2007. This is a community for discussing the index, its movements and wider M and A activity in the fintech world.

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Paul Penrose

Head of Research

Finextra

Member since

06 Oct 2006

Location

London

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