The TowerGroup team has developed a ViewPoint titled, “KKR Bids for First Data Corporation: Is the Sum of the Parts Greater than the Whole?”
Below are some brief highlights from that new research.
* While KKR’s announcement of its intended buyout of First Data raises more questions than it answers, it clearly indicates the demise of First Data’s monolithic posture as the one company in the world that was able to process any consumer payment anywhere. That stance, even though modified by the spin-off of Western Union, no longer suits the reality of the payments industry.
* TowerGroup questions whether KKR’s buyout effectively ends First Data’s ambitions relative to global expansion, or simply signals that this vision will be fulfilled only with serious retrenchment and investment.
* KKR will have to quickly determine whether to spin off components of First Data, align it with a complementary business, tightly integrate operating units, or invest in and improve it, the strategy will set a new course for the payments industry.
* Whether KKR chooses to maintain the business, as it has done with many prior acquisitions, or divest specific components remains to be seen. First Data’s substantial market components will be of interest to a wide audience in either event. Yet no matter what path KKR ultimately chooses, the strategy surrounding First Data is likely to set a new course for the global payments industry.
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