DENVER—Kohlberg Kravis Roberts & Co.’s $26 billion acquisition of First Data Corp. is on track to close in the third quarter, the head of the money transaction processing company said Friday.
First Data has obtained committed bridge financing for debt and equity portions of the transaction and most of the required regulatory approvals, said Ric Duques, chairman and chief executive officer.
“The few remaining regulatory approvals are progressing smoothly, and we do not anticipate any of them will delay our closing beyond the third quarter,” he said.
Shareholders will vote July 31 in New York on the proposed sale to an affiliate of the privately held equity firm. KKR has offered $34 a share, a premium of about 26 percent over First Data’s closing price on March 30.
Duques spoke to analysts during a conference call a day after First Data released second-quarter results, saying net income dropped 51 percent as a result of last year’s spinoff of The Western Union Co. yet revenue rose 16 percent.
Analysts generally deemed the second quarter a good performance, noting solid results in all three divisions—commercial, financial institutions and international.
“We hold to the belief that this deal will close, and with this earnings report and no change in the expectations for the business, the deal appears one step closer to completion,” FBR Research analyst Lauren Burk said in a research note.
Based in suburban Greenwood Village, First Data is a leading processor of electronic money transactions from credit cards, debit cards, gift cards and check cards, serving merchants as well as financial institutions.
For the quarter ending June 30, First Data reported net income of $229 million, or 30 cents a share, compared with net income of $462.6 million in the second quarter of 2006, or 60 cents a share, which included Western Union’s operations. The company spun off Western Union last September.
The second-quarter earnings from continuing operations were equal to 30 cents a share, First Data said.
Revenue rose 16 percent to $2 billion compared with $1.7 billion in the previous second quarter.
The 2006 quarter reflected special items equal to 7 cents a share that related to an accounting restatement, while special items for the most recent quarter were related to costs of the pending acquisition, litigation and restructuring among other items.
Analysts surveyed by Thomson Financial had forecast revenue of $1.9 billion.
“In the near term, First Data should continue to benefit from continued solid growth from acquisition synergies, and the company’s increasing exposure to international markets,” Citigroup Investment Research analyst Patrick Burton told clients in a note.
However, he said he expects the share price to trade toward the acquisition price but not much higher.
First Data delivered the report after the market closed Thursday. Its stock rose 6 cents to $32.40 a share in Friday morning trading. In the past year, shares have traded between $21.93 a share and $45.50 a share.
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