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Advent International Corp. has signed an agreement with Fifth Third Bancorp that gives the investment firm a 51% stake in Fifth Third's processing business through the establishment of a joint venture, according to Boston-based Advent. Fifth Third will retain a 49% interest in the new company, Fifth Third Processing Solutions LLC. Advent will pay Fifth Third $561 million in cash for the ownership interest and for certain put rights, the investment firm says. A put right is an option a firm issues to shareholders to sell it one share of common stock at a fixed priced within a specified period. Under the agreement, Fifth Third Bancorp subsidiary Fifth Third Bank will contribute the assets and operations of the processing business to the joint-venture company. The companies expect to close the deal in the second quarter after regulatory review and approvals. "We see the investment in [Fifth Third Processing Solutions] as an opportunity to acquire a sizable, growing, recession-resistant merchant-acquiring and payment-processing business," says Chris Pike, managing director in Advent's Boston office. For Fifth Third, "partnering with Advent will provide the processing business with access to additional capital and resources that we believe will create significant new opportunities and incremental growth in that business," says Kevin. T. Kabat, chairman, president and CEO of Cincinnati, Ohio-based Fifth Third Bancorp. Fifth Third processing customers and employees should experience a "smooth transition," according to Charles Drucker, Fifth Third Processing Solutions president. The Fifth Third platform "will remain in place, so our clients will not experience a system conversion, and our clients will continue to be served by the same people from Fifth Third Processing Solutions in the same locations," he says. Advent does not expect the agreement to affect Fifth Third's third-party resellers, says Pike.
