PRIVATE equity firms led by Blackstone Group, together with TH Lee and TPG, are in talks to buy Fidelity National Information Services, which, if the deal goes ahead, would rank as the biggest leveraged buyout since the financial crisis, sources said yesterday.
The groups, Blackstone, THL and TPG, would all invest equally in an offer for the company, known as FIS, that could be launched within two weeks.
Shares in the Jacksonville, Florida-based Fidelity rose 16 per cent to $30.27, giving it a market capitalisation of more than $11bn (£7.4bn). Fidelity National is a technology provider to the banking industry.
An employer of 30,000 people worldwide, Fidelity recently reported a rise in profits for the first quarter, with net income of $93.6m, compared with $33m a year ago.
Large leveraged buyouts have been pretty much extinct since the summer of 2007, when the financial crisis halted most financing for big deals, banks were left stuck with debt and the economy was on the verge of melting down.
But conditions have turned around, with the economy recovering, stock markets rebounding and confidence returning to the banking sector.
Up until now, the multiple billions of dollars needed for big deals have remained elusive. That is changing. Bankers and private equity firms have started viewing mega-buyouts of $10bn or more as achievable – something that was not even on the radar just six months ago.
It is a turnaround for a market that has not seen large deals since the end of the buyout boom when there were LBOs such as Blackstone’s $26 bn deal to buy Hilton hotels and Kohlberg Kravis Roberts’ $26bn deal to buy payment processor First Data Corp.
Blackstone’s UK operations employ mergers and acquisitions expert John Studzinski and the former Kingfisher chief executive Gerry Murphy, as well as David Blitzer.
Thomas Lee Partners, which was founded in 1974, is already a Fidelity backer.