On Monday credit and debit card processor First Data Corp. -- a highly leveraged portfolio company of Kohlberg Kravis Roberts & Co. --
announced the formation of a payments joint venture with Bank of America Corp. (NYSE:BAC).
The JV will be based in Atlanta, have 1,000 employees, and it expects to process a billion transactions a month. It will be called Banc
of America Merchant Services and led by Thomas Bell, chief strategy officer and president of First Data's
financial services business.
To learn the financial impacts of the transaction for the two parents, the companies say we'll have to wait until July 17 (when BofA releases second-quarter earnings) and August, when First Data will hold a quarterly results call.
Too bad. First Data's financial condition is a matter of keen interest in the deal world, as David Carey wrote in a
recent article in The Deal magazine on the future of the private equity industry. For now, Carey noted, First Data (which KKR bought for $29 billion in 2007) isn't producing enough free
cash flow to pay down debt.
The companies did say what their respective ownership stakes will be. BofA gets 46.5%, and First Data gets 48.5%. So what about the other 5%?
That stake will be held by "Rockmount Investments LLC, an investment vehicle controlled by a third party investor." Bell
told Reuters that the venture has a third-party investor "for various tax and legal reasons." He declined to say who's behind Rockmount, however. -
Kenneth Klee
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