Welsh Carson pulls TransFirst sale on recap, WorldPay: sources
NEW YORK (Reuters) - Buyout firm Welsh, Carson, Anderson & Stowe has ended talks on the sale of payment processing company TransFirst to pursue a dividend recapitalization, as potential buyers held out for combining it with a unit of private equity-owned peer WorldPay, sources said.
Welsh Carson had hired investment boutique Financial Technology Partners to explore a sale of TransFirst, hoping to fetch between $1.3 billion and $1.5 billion in a sale, people familiar with the matter told Reuters in September.
But following offers that fell short of expectations, TransFirst decided not to pursue a sale for now, the sources said on Thursday.
TransFirst has asked Bank of America Merrill Lynch (BAC.N) to arrange a loan of yet unspecified size to refinance existing debt, redeem a portion of the sponsor's preferred equity and fund a dividend, Thomson Reuters Loan Pricing Corporation reported on Wednesday.
Hauppauge, New York-based TransFirst had held talks with several private equity firms about a sale, including with CVC Capital Partners Ltd, Permira Advisers LLP, Blackstone Group LP (BX.N) and TPG Capital LP, one of the sources said.
Some buyers were also contemplating a combination of TransFirst with the U.S. division of WorldPay, another electronic payments processor, in order to capture higher market share and increase profitability, one of the people added.
WorldPay, controlled by buyout firms Advent International and Bain Capital LLC, hired JPMorgan Chase & Co (JPM.N) to explore a sale of its U.S. operations, a process that could start in December or January and fetch as much as $1 billion, two of the people said.
In the interim, TransFirst could see its debt rise by about $250 million to around $650 million as a result of the dividend recapitalization, the person added.
TransFirst, Financial Technology Partners, JPMorgan and the private equity firms involved did not immediately respond to a request for comment. WorldPay declined to comment.
TransFirst, one of the largest providers of secure payment processing in the United States, handles about $30 billion in annual transaction volume for more than 175,000 merchants and financial institutions, according to its website.
Welsh Carson bought TransFirst for $683 million in 2007 from buyout firm GTCR Golder Rauner LLC.
A smaller peer of TransFirst, First American Payment Systems, controlled by private equity firm Lindsay Goldberg LLC, had also been exploring a sale. The company could be valued at between $700 million to $800 million, people familiar with the matter told Reuters in September.
(The story fixes valuation of WorldPay unit to show $1 billion, not $1 million)
(Reporting by Greg Roumeliotis of Reuters News and Luisa Beltran of peHUB; Editing by Leslie Gevirtz)