April 9,2007

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  NEWS: Irish Firm Snatches up First Data

  The Belfast Telegram has reported that the Irish firm Kohlberg Kravis Roberts is set to buy up the United States-based credit card processing agent First Data. KKR will acquire First Data for $29 billion, which makes the deal one of the most massive buy-outs ever, and proves once again the tremendous spending power of private equity. First Data is a huge presence in American banking, and pulls in an estimated $1.5 billion in annual profits from check and credit/debit card processing. There have been whispers about its impending sale since last year, when it sold Western Union, the ubiquitous money transfer business. It was speculated that a private equity bidder would be most likely to buy up First Data.
  
  KKR, which gained notoriety due to its depiction in the book and movie "Barbarians at the Gate," epitomizes with its newest acquisition the latter-day private equity takeover of public companies. KKR, like many of its peers, financed the buy-out on the back of bundles of cheap debt and cash from hungry investors. These firms have no problem drumming up investment funds, as it's no secret that these buy-outs tend to generate disproportionately huge returns for the buyer.
  
  Not content to settle, KKR is also angling to bid on Texas power company TXU. The price tag for that property, $44 billion, would stand to far surpass the First Data deal as the hugest buy-out in history. TXU has stated publicly that it does not foresee a rival bid going higher than the one offered by the private equity consortium led by KKR and Texas Pacific.
  
  
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