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An article relating to this blog post on Finextra:

KKR to acquire First Data for $29 billion

Private equity firm Kohlberg Kravis Roberts (KKR) is to acquire First Data in a $29 billion buy-out.

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

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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