First Data Buyout

First Data Corp (FDC)
Kohlberg Kravis Roberts & Co. (KKR)
$29B Buyout

Summary

KKR is sole sponsor of buyout of
leading payment processor

$34 per FDC share; $29B total
FDC news - stock chart
Background of the merger

50 day go shop provision
No financing condition

Announced 4.02.07

Closed 9.24.07

Developments

Annual meeting proxy statement 4.17.07
Investor presentation 4.23.07
Investor presentation 5.11.07
Go shop period ends 5.22.07
Special shareholder mtg has been set for 7.31.07 6.20.07

Advisors

Financial

FDC: Morgan Stanley
Strategic Committee: Evercore Group
KKR: Citigroup / Credit Suisse / Deutsche Bank / HSBC / Lehman Brothers / Goldman Sachs / Merrill Lynch

Legal

FDC: Sidley Austin
Independent directors: Sullivan & Cromwell
KKR: Simpson Thacher

Merger Agreement

General

EDGAR filing
Hyperlinked version
Detailed hyperlinked index follows

Article I Definitions; Interpretation

1.2 Interpretation

Article II The Merger

2.1 The Merger
2.2 Closing
2.3 Effective Time
2.4 Effects of the Merger
2.5 Certificate of Incorporation and By-laws; Officers and
Directors

Article III Effect of the Merger on the Stock of the
Constituent Corporations; Surrender of
Certificates

3.1 Effect on Stock
3.2 Surrender of Shares

Article IV Company Reps

4.1 Organization
4.2 Subsidiaries
4.3 Capital Structure
4.4 Authority
4.5 Consents and Approvals; No Violations
4.6 Company Sec Documents
4.7 Absence of Material Adverse Change
4.8 Information Supplied
4.9 Compliance with Laws
4.10 Tax Matters
4.11 Liabilities
4.12 Litigation
4.13 Benefit Plans
4.14 Rights Agreement; Anti-takeover Provisions
4.15 Intellectual Property
4.16 Contracts
4.17 Properties
4.18 Environmental Laws
4.19 Insurance Policies
4.20 Labor Matters
4.21 Opinions of Financial Advisors
4.22 Brokers

Article V Parent and Sub Reps

5.1 Organization
5.2 Authority
5.3 Consents and Approvals; No Violations
5.4 Information Supplied
5.5 Litigation
5.6 Capitalization of Sub; Operations of Parent and Sub
5.7 Financing
5.8 Limited Guarantees
5.9 Brokers
5.10 Solvency
5.11 Customers and Strategic Partners
5.12 Tax Matters

Article VI Covenants Relating To Conduct of Business

6.1 By the Company Pending the Merger
6.2 Solicitation; Change in Recommendation
6.3 Parent and Sub Pending the Merger
6.4 No Control of other Partys Business

Article VII Additional Agreements

7.1 Employee Benefits
7.2 Equity Awards, Company Stock Purchase Plan and
Deferred Compensation Plan
7.3 Stockholder Approval; Preparation of Proxy Statement
7.4 Access to Information
7.5 Fees and Expenses
7.6 Public Announcements
7.7 Transfer Taxes
7.8 Takeover Laws
7.9 Indemnification; Directors and Officers Insurance
7.10 Reasonable Best Efforts
7.11 Financing
7.12 Resignations
7.13 Notification of Certain Matters
7.14 No Exclusive Arrangements
7.15 Cooperation With Solvency Opinion

Article VIII Conditions Precedent

8.1 Each Party
8.2 Company
8.3 Parent and Sub

Article IX Termination and Amendment

9.1 Termination
9.2 Effect of Termination
9.3 Amendment
9.4 Extension; Waiver

Article X General Provisions

10.1 Non-survival of Representations and Warranties and
Agreements
10.2 Notices
10.3 Counterparts
10.4 Entire Agreement; No Third-party Beneficiaries
10.5 Governing Law; Venue; Waiver of Jury Trial
10.6 Assignment
10.7 Severability
10.8 Enforcement of This Agreement
10.9 Obligations of Subsidiaries and Equity Group Members
10.10 Specified Alliances
10.11 Interpretation; Construction

Proxy Solicitation

Definitive proxy statement 6.26.07

Table of contents

Preliminary proxy statement 5.29.07

Table of contents

Deal Protection

Limited auction

Proxy statement disclosure
KKR founder proposed buyout to James Robinson III,
an FDC director, at $30 to $32 per share

KKR - FDC talks initiated at $32 to $33
Increased to $32.25 per share, after due diligence

Two other private equity firms participated in process

On advice of Morgan Stanley, no strategic buyers were contacted
Morgan Stanley was not allowed to provide stapled financing, after making request
KKR offered to increase its bid to $33, in exchange for exclusivity, but was declined

KKR and two other firms submitted buyout proposals

KKR offered $33.50
Bidder A offered $30 (or $29 plus $1 in stub equity)
Bidder B offered $32.25
KKR increased to $34 per share

Merger agreement negotiations

FDC's first draft merger agreement included a 60 day go shop provision
KKR proposed a 30 day go shop, with matching rights
FDC proposed 50 days with no matching rights
Final agreement has a 50 day go shop period with matching rights

No shop covenant

Merger agreement §6.2
50 day go shop period, ended 5.22.07

Break-up fee

Merger agreement §9.2
$250 mm during go shop period (~ 1% equity value)
$700 mm after go shop period (~ 2.7% equity value)

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