Fidelity National shares jump on buyout talk

The stock soars after The Wall Street Journal says Blackstone is in talks to take the credit card processor private. A deal might be worth $11 billion.

By Charley Blaine May 6, 2010 1:11PM
Updated: 1:35 p.m. ET.

For a couple of days, Wall Street has been abuzz that a big buyout -- a deal worth $10 billion or more -- was coming.

Today, names were put to the rumors: Blackstone (BX) would be the acquirer, The Wall Street Journal said, with Fidelity National Information Services (FIS) the target.
Blackstone and a group of investors were in talks with Fidelity National, the Journal said. Assuming the two sides agree on price and terms, it would be the biggest leveraged buyout since the credit crisis erupted in 2007.

Fidelity National shares jumped 15.8% to $30.04 on the news, which would suggest a market capitalization of more than $11 billion. The stock's jump was abrupt in the extreme. At 11:55 a.m. ET, the shares were at $25.80, down 0.8%. The news broke in the next few minutes, and at noon, the shares were at $29.92.

But Blackstone investors were more skeptical. The company is organized as a master limited partnership. The partnership units were down 5.1% to $12.62.

Fidelity National, headquartered in Jacksonville, Fla., processes credit card transactions, services auto loans and provides back-office services to money-management firms. It has been around since the late 1960s but public only since 2001.

The company earned $101 million, or 42 cents a share, on revenue of $3.77 billion in 2009, down from $109.9 million, or 57 cents, on revenue of $3.43 billion in 2008. Fidelity National Information Services

The stock peaked at $31.58 in July 2007 and bottomed at $12.47 in October 2008. It was up 11% for the year as of Wednesday's close.

It also has about $3 billion in debt.

It is NOT Fidelity Investments, the mutual fund company based in Boston.

Blackstone went public at $38 in 2007 as the stock market was peaking and has been a disappointment for investors ever since. Its unit price collapsed in the stock market crash, bottoming at $3.87 on Feb. 26, 2009. It finished 2009 at $13.12.

The jump in Fidelity National shares also pushed shares of competitor Fiserv (FISV) up 7.3% to $54.66. Other competitors include Accenture (ACN) and Total System Services (TSS). Both stocks were little changed today.
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