Inside the $22 billion Fiserv-First Data deal

New public filing reveals cancellation fee, how deal came together

The Fiserv headquarters in Brookfield.

If the acquisition of First Data Corp. by Fiserv Inc. falls through, one of the companies will have to pay the other $665 million.

The $22 billion merger of two Fortune 500 financial technology firms was announced in January and is set to close in the third quarter. A new public filing pulls back the curtain on how the deal came together.

New York City-based First Data approached Brookfield-based Fiserv in September, after a different merger fell through. First Data was approached by an unnamed company (Party A) in December 2017 about being acquired, and those conversations continued until April 2018, when the deal was dropped. First Data felt the price offered by Party A – a price per share of between $20.50 and $23.25, was too low. In addition, Party A’s chief executive officer would be CEO of the combined company, which First Data took issue with, in addition to concerns regarding culture and fit, and potential risks of the transaction.

“Despite the termination of First Data’s discussions with Party A, the First Data board and management continued to believe in the potential benefits of a strategic combination of First Data with a complementary financial services technology company, including because of the potential for revenue synergies and cost savings, as well as the prospect of achieving normalized debt levels and enabling First Data to invest further in its business, which could result from such a combination,” the filing says.

So on Sept. 27, 2018, Scott Nuttall, lead director of the First Data board, called Jeffery Yabuki, president and CEO of Fiserv, about a possible merger.

In an October visit to New York, Yabuki met with top executives at First Data, and First Data executives visited Milwaukee for a meeting with Yabuki in November.

By Nov. 15, the Fiserv board had unanimously agreed Fiserv should proceed with preliminary due diligence on the transaction. Yabuki sent a non-binding letter of intent to First Data on Nov. 17, proposing a price of $23 to $25 per share.

Bisignano told Yabuki that day the price was too low. So Yabuki the next day upped it to $24 to $25 in an all-stock merger with a fixed exchange ratio.

Once the companies had agreed on a price, they proceeded with due diligence. On Dec. 12, Bisignano and Yabuki talked about what the combined company’s management team could look like, including which managers would report to each of them.

Managers of both companies and their advisors spoke frequently on the phone, but also met in person in New York, New Jersey, Atlanta, Chicago, Waukesha, Brookfield, Dallas and Los Angeles throughout the process.

The companies were negotiating and reviewing the merger agreement right up into the early morning hours of Jan. 16, the day the transaction was announced.

In the end, the per-share price ended up at $22.74 per share, for a premium of 29 percent.

The Fiserv headquarters in Brookfield.

If the acquisition of First Data Corp. by Fiserv Inc. falls through, one of the companies will have to pay the other $665 million.

The $22 billion merger of two Fortune 500 financial technology firms was announced in January and is set to close in the third quarter. A new public filing pulls back the curtain on how the deal came together.

New York City-based First Data approached Brookfield-based Fiserv in September, after a different merger fell through. First Data was approached by an unnamed company (Party A) in December 2017 about being acquired, and those conversations continued until April 2018, when the deal was dropped. First Data felt the price offered by Party A – a price per share of between $20.50 and $23.25, was too low. In addition, Party A’s chief executive officer would be CEO of the combined company, which First Data took issue with, in addition to concerns regarding culture and fit, and potential risks of the transaction.

“Despite the termination of First Data’s discussions with Party A, the First Data board and management continued to believe in the potential benefits of a strategic combination of First Data with a complementary financial services technology company, including because of the potential for revenue synergies and cost savings, as well as the prospect of achieving normalized debt levels and enabling First Data to invest further in its business, which could result from such a combination,” the filing says.

So on Sept. 27, 2018, Scott Nuttall, lead director of the First Data board, called Jeffery Yabuki, president and CEO of Fiserv, about a possible merger.

In an October visit to New York, Yabuki met with top executives at First Data, and First Data executives visited Milwaukee for a meeting with Yabuki in November.

By Nov. 15, the Fiserv board had unanimously agreed Fiserv should proceed with preliminary due diligence on the transaction. Yabuki sent a non-binding letter of intent to First Data on Nov. 17, proposing a price of $23 to $25 per share.

Bisignano told Yabuki that day the price was too low. So Yabuki the next day upped it to $24 to $25 in an all-stock merger with a fixed exchange ratio.

Once the companies had agreed on a price, they proceeded with due diligence. On Dec. 12, Bisignano and Yabuki talked about what the combined company’s management team could look like, including which managers would report to each of them.

Managers of both companies and their advisors spoke frequently on the phone, but also met in person in New York, New Jersey, Atlanta, Chicago, Waukesha, Brookfield, Dallas and Los Angeles throughout the process.

The companies were negotiating and reviewing the merger agreement right up into the early morning hours of Jan. 16, the day the transaction was announced.

In the end, the per-share price ended up at $22.74 per share, for a premium of 29 percent.

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