The $26 billion acquisition of global
payment processor First Data by private equity giant KKR has been
completed despite ongoing turmoil in the credit markets that
threatened to hamper the deal. KKR’s banks reportedly sold $9.4
billion of loans to fund the buyout, the biggest offering of
high-yield loans since the global credit crunch emerged in July,
but at a discount of 3 to 4 percent. It is believed that the
remainder of the loans is being held by the banks underwriting
them, among them Citibank and HSBC.

As expected, First Data will now begin to make cost-cutting moves
that will include consolidating data centres and shifting some
operations to less-costly locations overseas. First Data announced
that it would also reduce corporate overheads, consolidate office
space and work with fewer vendors to “increase its purchasing
power”. First Data said it estimated that it will incur a charge of
$125 million to $150 million to implement the changes but expects
to save at least $150 million by the end of 2008.

Management changes

First Data’s management has also been reshuffled, appearing to
signal a shift in emphasis from pure payment processing to
IT-oriented services. Michael Capellas has been appointed as the
company’s new chairman and CEO, replacing Ric Ducques. Capellas
comes from an IT background, having previously been CEO of MCI,
president of Hewlett-Packard and chairman and CEO of Compaq. Tom
Bell has been appointed as the company’s chief strategy officer,
responsible for innovation. Bell was previously a managing director
of the communications and high-tech practice at global business
consultancy Accenture. Also, Grace Chen Trent has joined First Data
as its head of marketing and communications. Trent was most
recently senior vice-president of communications for MCI.

Other management changes include the appointment of David Yates to
lead First Data’s international operations, having previously been
president of the company’s Europe, Middle East and Africa

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