The pending takeover of Fidelity National Information Services Inc. collapsed late Monday, with a Blackstone Group-led consortium dropping its plan to acquire the financial-data processor, according to a person familiar with the situation.
Fidelity National's board had asked for a "substantial increase" above the $32-per-share bid the private-equity firms had proposed, said a person familiar with the deal talks. The two sides couldn't reach an agreement on price, this person said, and the investor group backed out of the deal.
Late Monday, Fidelity National shares dropped nearly 10% in after-hours trading, to roughly $26 each. (Fidelity National is unrelated to mutual-fund company Fidelity Investments.)
As is typical in these negotiations, the two sides could revive their discussions. Often a collapse in deal talks helps "reset" a stock price, against which two parties can restart discussions.
But, late Monday, both sides rushed to get out their side of the story, suggesting a messy end to the talks.
After the market close Monday, Fidelity National issued a statement saying that it is weighing a leveraged buyout, the first acknowledgment by Fidelity National of a potential takeover since The Wall Street Journal reported the talks on May 6.
It also said it is evaluating a potential leveraged recapitalization. In that type of arrangement, Fidelity National would take on large amounts of debt, and pay a dividend to shareholders, all while remaining a public company.
A "leveraged recap" can help appease investors but carry a large amount of risk. Most corporate boards have grown averse to these kinds of transactions.
Boards tend to prefer the type of offer made by Blackstone Group, Thomas H. Lee Partners and TPG. Including the assumption of Fidelity Nationa's debt, the group's deal would have approached $15 billion. A $9.75 billion debt package was expected to come from seven different banks, according to people familiar with the talks.
The collapse underscores the fragility of the markets at a time when private-equity firms are again starting to again strike multi-billion-dollar leveraged buyouts. The Fidelity National deal was supposed to usher in a new wave of so-called "megabuyouts," $10 billion-plus deals for which the private-equity industry became known for in the middle of last decade.