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Barclays PLC (BCS) - free report >>
Fidelity National Information Services, Inc. (FIS) - free report >>
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Fidelity National to Sell Majority Stake in Capco to CD&R
Fidelity National Information Services, Inc. (FIS - Free Report) recently signed an agreement with Clayton, Dubilier & Rice (CD&R), a private investment firm with operations in London and New York, to sell about 60% ownership in its global consulting business, Capco. Fidelity National will receive net cash of about $477 million from the deal.
The deal, which is expected to close in early third-quarter 2017, will make Capco an independent company operating under its own name. Further, Russ Fradin, Operating Partner of CD&R, will become Chairman of the company and Lance Levy will continue to operate as the CEO.
For the second quarter, Fidelity National expects Capco to contribute 11–12 cents to adjusted earnings per share. It also anticipates cash proceeds after deducting taxes and deal-related expenses to be about $445 million.
For the transaction, CD&R is being financed by Barclays PLC (BCS - Free Report) , Credit Suisse Group AG , BMO Capital Markets, investment banking subsidiary of Bank of Montreal (BMO - Free Report) , HSBC Securities (USA) INC and HSBC Bank USA, National Association, and Natixis.
Fidelity National expects this deal to improve Capco’s growth potential along with expanding the number of services it currently offers. Further, its active involvement in improving performance through inorganic growth strategies is encouraging.
Fidelity National’s shares have gained 6.3% in the last six months, underperforming the 11.9% growth for Zacks categorized Financial Transaction Services industry.
Currently, Fidelity National carries Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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