Fiserv buying First Data in an all-stock, $22 billion-dollar deal has been one of the biggest news pieces of 2019. Following the close of the transaction, Fiserv shareholders will own 57.5% of the combined company, and First Data shareholders will own 42.5%, on a fully diluted basis.
The companies have very optimistic expectations for this merger. The transaction is expected to generate at least $500 million of revenue synergies over a five-year period. The combined company expects to generate significant free cash flow exceeding $4 billion in the third year following the close, including synergies.
Additionally, the combination is expected to generate approximately $900 million of run-rate cost synergy savings over five years, driven primarily by the elimination of duplicative corporate structures, streamlined technology infrastructure, increased operational efficiencies, process improvements, and footprint optimization.
While the details of the announcement are certainly interesting, there is a bigger picture to this landmark deal that catches the eye.
Fiserv buying First Data was neither about Fiserv nor First Data, it was about KKR
This acquisition was arguably brewing for over a decade and it’s all about a private equity firm KKR, which acquired First Data in 2007 for about $26...