US financial services firm Marshall & Ilsley (M&I) has confirmed that it is splitting off its fintech unit Metavante into a public company worth around $4.25 billion.
The WSJ reporterd earlier this week that Metavante was planning to spin off the Metavante unit.
In a statement the bank says it plans to split its business into two independent public companies - Marshall & Ilsley Corporation and Metavante Corporation.
Under an investment agreement private equity firm Warburg Pincus will pay $625 million for a 25% stake in Metavante, while M&I shareholders will own 75% of the business. The plan will be implemented through a tax free spin-off of M&I.
Upon completion of the transaction, M&I shareholders will receive one share of M&I stock and one share of Metavante stock for every three shares of M&I stock held.
The transaction also includes $1.75 billion of debt. As a standalone company Metavante will be worth approximately $4.25 billion, including the debt.
The business, which has approximately 5500 employees, will continue to be based in Milwaukee. Frank Martire will continue to serve as president and CEO and Mike Hayford will remain senior executive vice president and chief operating officer.
M&I came near an initial public offering of Metavante in 2000, but the deal was pulled following a market slowdown. But Metavante has acquired 17 businesses since the beginning of 2004, including the Nyce electronic payments network. The business finished last year with net income of $160 million on revenue of $1.5 billion.
Matire says Metavante now has approximately three times greater annual revenues than it did seven years ago.
"When this transaction is completed, we will have access to financial resources to continue to build new products, acquire additional companies, invest in new technologies, as well as attract and retain the best employees in the industry," he adds.
M&I says it expects to receive about $1.67 billion from the transaction. Mark Furlong, M&I president, says the capital will be used to grow the business and "fund strategic initiatives within wealth management and our other business lines".