NEW YORK—Kohlberg Kravis Roberts & Co. failed to reach an agreement with bankers in charge of financing the buyout shop’s $26 billion takeover of First Data Corp., and negotiations will resume next week, a person familiar with the talks said.
The New York-based private equity firm has been meeting with bankers from Credit Suisse Group and Citigroup Inc. since Monday, said the person, who spoke anonymously because they were not authorized to speak publicly on the matter.
The sides were unable to agree on Wednesday about pricing for the debt or how much will be issued, the person said, and decided to break in time for Rosh Hashanah, one of the biggest Jewish holidays of the year.
Spokesmen for Citigroup, KKR and First Data declined to comment. Credit Suisse did not immediately return telephone calls.
The financing talks on First Data have become the most heavily watched negotiations on Wall Street this year, and could set a precedent for future deals. They come at a time of anxiety over large-scale debt offerings, amid global market turmoil and tightening credit conditions.
Banks, like the seven involved in the arranging the First Data transaction, have become nervous about massive loans on their books. And there is increasing pressure on private equity firms to renegotiate deals to lessen the amount of money borrowed.
The fact that KKR and the banks delayed talks until next week might show confidence in the deal, one private equity watcher said.
“I think they have a mutual interest in finding a workable solution, and the fact they took the holiday and weekend off is encouraging,” said William Kirsch, chairman of law firm Paul Hastings’ global private equity practice. “They probably feel comfortable with the fact they’ll get the terms completed during the ordinary course of business.”
Banks agreed to back private equity deals with virtually no financing outs during the past few years, and they are now under pressure. It is more difficult for them to back out of a deal than for a private equity firm to walk away from a takeover, and that is changing the playing field.
Cerberus Capital Management in July had to renegotiate its takeover of Chrysler Group from Daimler and inject more equity into the transaction. Then Home Depot lowered the sale price on its wholesale supply unit by 17 percent to complete its sale to private equity firms.
