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Bids for PE-backed SunGard PS&E come in low: sources

SunGard Data System Inc’s sale of its public sector and education business has hit a bump, three banking and private equity sources familiar with the transaction said.

Bids for the SunGard unit came in low, the sources said. Strategics also dropped out, leaving private equity firms to compete for the SunGard PS&E unit, the people said. It’s unclear how low the bids were or which firms are involved.

Fidelity National Information Services Inc is seeking $1 billion for the SunGard unit, Reuters reported in March.

Barclays is advising on the process, sources said.

SunGard’s public sector business provides software and services for local governments, public safety, justice agencies and non-profits, the company’s website said. SunGard K-12 supplies software and professional services to help K-12 schools and school districts.

PS&E represented 8 percent of SunGard’s $2.8 billion of revenue in 2014, a regulatory filing from July 2015 said. The PS&E unit generated adjusted EBITDA of $16 million for the three months ended March 31, 2015, the SEC filing said.

“It is not really one business but three different ones,” said one of the three sources, a PE executive whose firm is no longer involved in the process.

Another of the three sources, a banker, said the SunGard auction “is not going as well as it should.”

However, a second banker said the process may still “get done.”

FIS launched the PS&E auction just months after closing its buy of SunGard, a software and technology services company, for $9.3 billion in late November.

Seven sponsors — including Bain Capital, Blackstone Group, Goldman Sachs Capital Partners, KKR, Providence Equity Partners, Silver Lake and TPG — were the sellers. The PE firms acquired SunGard in August 2005.

The $11.4 billion SunGard acquisition is considered one of the signature deals of the buyout heyday that preceded the global financial crisis, the Wall Street Journal reported.

Executives for FIS and Barclays declined comment.

Action Item: SunGard public sector:

An auctioneer at the Magic Millions sales complex on Australia’s Gold Coast on  October 30, 2012, brings his hammer down during an auction of broodmares from Patinack Farm, the horse-racing stud owned by mining magnate Nathan Tinkler. Photo courtesy Reuters/Tim Wimborne