Fidelity National Shares Surge on $9.1 Billion SunGard Takeover

Why Fidelity National Is Buying SunGard for $9.1B

Fidelity National Information Services Inc. rose the most in more than three years after the provider of banking technology agreed to buy software maker SunGard Data Systems Inc. in a deal valued at $9.1 billion, including debt.

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FIS, which will expand its reach into capital markets and wealth management with the acquisition, jumped as much as 7.1 percent in New York trading after the deal was announced, the biggest intraday increase since February 2012.

The combined company will have more than $9.2 billion in annual revenue, 55,000 employees and operate in more than 100 countries, according to a statement from Jacksonville, Florida-based FIS. The firm said it will acquire all of SunGard’s equity and expects to refinance all of its $4 billion in debt.

SunGard is “a perfect fit,” FIS Chief Executive Officer Gary Norcross said on a conference call.

The acquisition will be financed with a mix of 45 percent cash and 55 percent FIS stock, according to a presentation on the company’s website. The firm forecast $200 million in cost savings by 2017, and said it will temporarily suspend share repurchases.

Shares of FIS rose 5.6 percent to $68.71 at 9:38 a.m. in New York, after rising as high as $69.70, a record.

SunGard, which makes software for financial institutions, is owned by seven private-equity firms, including Silver Lake Management, Providence Equity Partners and KKR & Co. The Wayne, Pennsylvania-based company filed to go public in June. Its long-term debt was $4.67 billion at the end of March, according to regulatory filings, while cash was $555 million.

Private Equity

SunGard was acquired by the private-equity firms for about $11 billion in 2005, when leveraged buyouts by large groups of investors were more popular. At the time, it was the second-largest deal of its kind, according to data compiled by Bloomberg.

Assets that don’t fit FIS’s focus on financial services might be divested, Norcross said on the call.

FIS said it was impressed with SunGard’s management, and sees opportunities for some of the company’s leadership to stay on at the new company.

“We’ll certainly make sure that we have everybody that we want to keep and make sure we have them locked up appropriately before we close,” Norcross said.

Fidelity National Financial Inc. spun off Fidelity National Information Services in 2006. Bloomberg LP, the owner of Bloomberg News, competes with FIS and SunGard in providing software to the financial industry.

Bank of America Corp. and Centerview Partners LLC were financial advisers to FIS, and Willkie Farr & Gallagher LLP provided legal advice. Goldman Sachs Group Inc., JPMorgan Chase & Co., Barclays Plc, Deutsche Bank AG and Credit Suisse Group AG were SunGard’s financial advisers. Simpson Thacher & Bartlett and Shearman & Sterling served as legal advisers to SunGard.

The deal is expected to be completed in the fourth quarter, according to the statement.

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