In a move reminiscent of the blockbuster buyouts of the late 1980s, seven private investment firms said they would pay almost US$11 billion in cash to acquire SunGard Data Systems Inc, the financial software powerhouse known for trading services and creating backup data systems in the event of a disaster.
The deal announced on Monday would be the second largest leveraged buyout ever of a public company by a private investor, in dollar terms unadjusted for inflation.
The record is Kohlberg Kravis Roberts & Co's US$25.1 billion purchase of RJR Nabisco in 1989, according to Thomson Financial.
Under the terms of the agreement, SunGard stockholders will receive US$36 in cash for each share of Wayne, Pennsylvania-based SunGard common stock they hold -- a 14 percent premium to the company's closing price last Thursday, before the Good Friday holiday, of US$31.55 per share. Some US$500 million in bonds will remain outstanding.
Thomson Financial valued the deal at US$10.964 billion, including outstanding shares and in-the-money stock options but excluding debt and cash on the balance sheet. In a conference call with analysts, SunGard came up with a different figure -- valuing the total transaction at US$11.3 billion, including common shares outstanding, stock options, debt and excluding balance-sheet cash.
Sungard's new owners, led by technology-focused investment firm Silver Lake Partners, would include Bain Capital LLC, The Blackstone Group LP, Goldman Sachs Capital Partners, Kohlberg Kravis Roberts & Co, Providence Equity Partners Inc and Texas Pacific Group.
The consortium declined to publicly discuss the financing of the purchase, but a person familiar with the deal said the group intends to use US$3.5 billion of its own money and borrow the rest.
SunGard, which earned US$454 million on revenues of US$3.56 billion last year, provides data-handling products used by Wall Street brokers and mutual funds. The company claims that its software manages 70 percent of the transactions made on the NASDAQ Stock Market, but its biggest business is creating backup data systems in case a client's main systems are damaged or disabled by a natural disaster, blackout or terrorist attack.
The company's competitors include Automatic Data Processing Inc and DST Systems Inc.
Sungard's sale is the latest in a string of high-profile buyouts, including the US$6.6 billion deal earlier this month to buy Wayne, New Jersey-based Toys R Us Inc by a group including Kohlberg Kravis Roberts, Bain and Vornado Realty Trust. In January, Spain-based Amadeus Global Travel Distribution SA agreed to a US$5.8 billion buyout by two British private investment groups.