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Strategics dominate Parthenon’s Cayan sale, eye Merchant e-Solutions

Two payments deals currently in the market are producing different results for private equity.

In one corner is Cayan LLC. PE firms have been largely shut out of the Cayan auction, which has been dominated by strategics, one source said. Strategics offered $900 million to $1 billion for the company, while PE proposals ranged $700 million to $800 million, the source said.

“PE tried and was uncompetitive by a mile,” the source said.

Parthenon Capital put Cayan up for sale in the early fall. The Boston company provides payments technology and merchant services. Cayan produces about $40 million in run-rate EBITDA, Buyouts has reported.

Bids for Cayan were due Nov. 6, Buyouts has reported. Only one PE firm, with a strategic angle, remains in the process, the source said.

It’s unclear which strategics are vying for Cayan but prospective buyers are from Europe, the U.S. and Asia, the source said. First Data, which is backed by KKR, was interested in the company, Buyouts said in October. Last month, First Data mistakenly revealed that it was in talks to buy BluePay Processing for $760 million. First Data yanked the announcement but later confirmed its discussions for BluePay, which is backed by TA Associates. Executives for First Data could not be reached for comment.

The other payments deal in market is Merchant e-Solutions. Bids for MeS are due Nov. 10, sources said.

Cielo SA, the largest credit card processor in Brazil, has owned Merchant e-Solutions for five years. MeS produces about $30 million in EBITDA; it is expected to sell for $500 million to $750 million, Buyouts said.

Strategics and PE are bidding for MeS, sources said. One party interested is National Australia Bank, people said. EVO Payments was said to be considering Merchant e-Solutions, although others disputed their interest. EVO, a portfolio company of Madison Dearborn Partners, was itself up for sale earlier this year and dropped its dual-process plans in June, Buyouts said.

Sage Payments, which is backed by GTCR, is also bidding for MeS, sources said.

Cielo acquired MeS in 2012 for $670 million. Merchant e-Solutions has a good processing platform and commerce capabilities but its performance has been a letdown, sources said. “The business has been moving backwards a lot,” one PE source said.

Executives for Cayan, Madison Dearborn, First Data, BluePay, Merchant e-Solutions, Cielo and Sage could not be reached for comment. EVO, Goldman and GTCR declined comment.

Action Item: Call Marcelo Bernal, MeS’s interim co-CEO, at +1 866-663-6132

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