Video: SunGard going private

updated 3/28/2005 12:53:13 PM ET 2005-03-28T17:53:13

A consortium of seven private investment firms is paying $10.8 billion to acquire financial data powerhouse SunGard Data Systems Inc. in the nation’s second-largest leveraged buyout ever.

The deal announced Monday would only be exceeded in size among takeovers of public companies by private investors by Kohlberg Kravis Roberts & Co.’s $29.4 billion purchase of RJR Nabisco in 1989, according to Thomson Financial.

SunGard creates a variety of financial software, including products that manage complex stock trades, insurance holdings, mutual funds and corporate finances. The company claims that its software manages 70 percent of the transactions made on the Nasdaq Stock Market. It also produces software for corporate information management.

Under the terms of the agreement, SunGard stockholders will receive $36 in cash for each share of SunGard common stock they hold. Some $500 million in bonds will remain outstanding. In a morning conference call with analysts, SunGard valued the total transaction at $11.3 billion, including common shares outstanding, stock options, debt and excluding cash on the balance sheet.

The consortium, led by technology-focused investment firm Silver Lake Partners, includes Bain Capital, The Blackstone Group, Goldman Sachs Capital Partners, Kohlberg Kravis Roberts & Co., Providence Equity Partners and Texas Pacific Group.

SunGard’s board of directors approved the merger and it is expected to be completed in the third quarter of 2005, subject to stockholder and regulatory approval.

“This transaction offers great value to our stockholders and represents an endorsement of our business model, industry leadership and financial strength,” said Cristobal Conde, president and chief executive officer of SunGard.

SunGard’s senior management team and its business plan will remain largely unchanged after the sale, Conde said in a morning conference call with business analysts. He said that becoming a private company will help the company “do things faster.”

SunGard serves more than 20,000 customers in more than 50 countries.

In light of the sale, the company said it has abandoned plans to spin off its Availability Services unit, which helps companies keep their computer systems running in the event of a natural disaster.

The unit accounted for about 40 percent of SunGard’s business in 2003.

Copyright 2005 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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