FIS sells 60 pct of Capco to CD&R for $477 mln

FIS said May 23 that it has agreed to sell a majority stake, 60 percent, of Capco to Clayton, Dubilier & Rice for $477 million. FIS will retain 40 percent. Capco provides business, digital and technology consulting services for the financial services industry. Russ Fradin, the former CEO of SunGard and current CD&R operating partner, will serve as chairman of Capco. Lance Levy will continue as Capco CEO. Barclays, Credit Suisse, BMO Capital Markets, HSBC Securities (USA) INC and HSBC Bank USA, National Association, and Natixis are providing financing. Centerview Partners LLC acted as financial adviser to FIS, while Willkie Farr & Gallagher LLP was their attorney. Barclays, BMO Capital Markets, Credit Suisse, HSBC Securities (USA) INC., and Peter J. Solomon Co, an affiliate of Natixis, acted as financial advisors to CD&R. Debevoise & Plimpton LLP served as CD&R’s legal advisor in the transaction

PRESS RELEASE

JACKSONVILLE, Fla., and NEW YORK, NY, May 23, 2017 – FIS™ (NYSE: FIS), a global leader in financial services technology, and Clayton, Dubilier & Rice (CD&R) today announced a definitive agreement in which FIS will sell a majority ownership stake in Capco to CD&R, establishing Capco as an independent company.

 

FIS will sell approximately 60 percent equity interest in its Capco business to CD&R funds and receive net cash proceeds of $477 million. Upon closing, FIS will also retain approximately 40 percent equity interest in the business. The transaction, which includes other consulting-related assets, is expected to close by early third quarter, subject to required regulatory approvals and customary closing conditions.

Capco, the public brand for FIS’ management consulting offering, is a global consulting organization specializing in business, digital and technology consulting services for the financial services industry. Upon closing, Capco will become a privately held company operating under the Capco name. CD&R Operating Partner Russ Fradin, the former chief executive officer (CEO) of SunGard, will serve as Chairman of the independent Capco company. Lance Levy will continue to serve as Capco CEO.

“CD&R’s investment will enhance Capco’s ability to grow and expand its market offerings while maintaining its market leading transformation services,” said Gary Norcross, president and chief executive officer, FIS. “FIS’ ongoing minority ownership enables our clients to continue to benefit from the relationship, while we focus investment on our IP-led solutions.”

 

“We are pleased to be partnering with FIS and to support and invest in Capco as a dynamic and highly-respected independent enterprise,” said CD&R Operating Partner Russ Fradin. “Capco’s many underlying strengths, which include a highly skilled team of consultants, a passion for problem solving and delivering value to clients, and a reputation for exceptional service, provide a solid foundation for continued success.”

 

“As an independent enterprise, we will remain laser focused on delivering the highest levels of service and value to our clients,” said Capco CEO Lance Levy. “CD&R’s investment and support is a big win for us – they will accelerate the expansion of our market offerings and coverage, and will provide Capco access to business insights and skills to drive the next phase of our growth.”

 

FIS expected the consulting business to contribute $0.11 – $0.12 to second half 2017 adjusted EPS and anticipates cash proceeds, net of taxes and deal-related expenses, of approximately $445 million.

 

Centerview Partners LLC acted as financial advisor to FIS. Willkie Farr & Gallagher LLP served as FIS’ legal advisors in the transaction. CD&R has obtained committed financing from Barclays; Credit Suisse; BMO Capital Markets; HSBC Securities (USA) INC. and HSBC Bank USA, National Association; and Natixis, New York Branch. Barclays, BMO Capital Markets, Credit Suisse, HSBC Securities (USA) INC., and Peter J. Solomon Company, an affiliate of Natixis, acted as financial advisors to CD&R. Debevoise & Plimpton LLP served as CD&R’s legal advisor in the transaction.

 

About FIS

FIS is a global leader in financial services technology, with a focus on retail and institutional banking, payments, asset and wealth management, risk and compliance, consulting, and outsourcing solutions. Through the depth and breadth of our solutions portfolio, global capabilities and domain expertise, FIS serves more than 20,000 clients in over 130 countries. Headquartered in Jacksonville, Fla., FIS employs more than 57,000 people worldwide and holds leadership positions in payment processing, financial software and banking solutions. Providing software, services and outsourcing of the technology that empowers the financial world, FIS is a Fortune 500 company and is a member of Standard & Poor’s 500® Index. For more information about FIS, visit www.fisglobal.com.

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About Clayton, Dubilier & Rice

Founded in 1978, Clayton, Dubilier & Rice is a private investment firm. Since inception, CD&R has managed the investment of more than $22 billion in 72 companies representing a broad range of industries with an aggregate transaction value of more than $100 billion. The Firm has offices in New York and London. For more information, visit www.cdr-inc.com.Founded in 1978, Clayton, Dubilier & Rice is a private investment firm. Since inception, CD&R has managed the investment of more than $22 billion in 72 companies representing a broad range of industries with an aggregate transaction value of more than $100 billion. The Firm has offices in New York and London. For more information, visit www.cdr-inc.com.

 

Forward-Looking Statements
This press release may contain statements, estimates or projections that constitute “forward-looking statements” pursuant to the safe harbor provisions of the U.S. federal securities laws. Generally, the words “believe,” “expect,” “intend,” “estimate,” “anticipate,” “project,” “will” and similar expressions identify forward-looking statements, which generally are not historical in nature. Forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from FIS’ historical experience and our present expectations or projections. These risks include, but are not limited to, changes in general economic, business and political conditions, developmental and conversion delays or disruptions inherent with new software products, technology and outsourcing solutions, and risks of reduction in revenue from the elimination of existing and potential customers due to consolidation in or new laws or regulations affecting the banking, retail and financial services industries, changes in the growth rates of the markets for our solutions, and other risks detailed in our filings with the Securities and Exchange Commission (SEC), including the “Risk Factors” section of our Annual Report on Form 10-K for the year ended December 31, 2016, and subsequent SEC filings. You should not place undue reliance on forward-looking statements, which speak only as of the date they are made. FIS undertakes no obligation to publicly update or revise any forward-looking statements.