A buyout consortium led by San Francisco-based Silver Lake Partners is in talks to buy Sungard Data Systems for as much as $10 billion – in what would be one of the biggest leveraged buyouts since the landmark takeover of RJR Nabisco, The Post has learned.
The consortium – which includes buyout kingpins Texas Pacific Group and Thomas H. Lee Partners – has been holding serious discussions with Sungard for the past several weeks about buying the software and processing-services company and taking it private, sources familiar with the situation said.
Other private-equity firms that may be involved include Blackstone Group, Citicorp Venture Capital and Kohlberg Kravis Roberts, the firm that landed RJR Nabisco for $25 billion in the 1989 takeover battle that was chronicled in the business book classic, “Barbarians at the Gate.”
It is unclear how advanced the talks are or whether a deal will ultimately materialize, sources warned.
The proposed leveraged buyout of the company – whose clients include most of the world’s top financial companies – would likely require the investor group to commit as much as $3 billion to $4 billion in equity, with the remainder of the purchase price to be financed with debt.
Shares of Sungard, which has a market cap of $7.2 billion, closed Friday at $24.95 per share in New York Stock Exchange trading.
A spokesman for Sungard was not immediately available for comment yesterday afternoon.
Sungard, based in Wayne, Pa., derives its revenue from two distinct operations – its disaster-recovery unit and its software and processing business.
The recovery unit, which boasts some 10,000 clients including Citigroup and Sun Microsystems, is the market leader in the business of replicating corporate data systems in the event of a natural disaster or terrorism attack.
The division, which has grown significantly since the Sept. 11 terrorist attacks, accounted for 34 percent of the company’s total revenue last year.
Sungard’s software and processing unit develops support systems used by banks, brokerage firms, mutual funds and other companies for transaction processing and securities and commodities trading and investment accounting.
It has about 10,000 employees and serves about 15,000 customers, including the world’s 50 largest financial-services companies.
Sungard is entertaining sale talks on the heels of the company’s announced spin-off of its disaster-recovery business to shareholders. In October, it said it would separate its disaster-recovery unit from the software and business processing division.
Observers suggest that if the investor succeeds in its buyout of Sungard, it may try to quickly flip the unit.
Sungard, which was created through a $19 million leveraged buyout in 1983, has grown by snapping up niche competitors with complementary products and services.
Silver Lake’s biggest home run has been its LBO of disk-drive maker Seagate Technology, which it took private in 2000. Two years later, the company went public again, making Silver Lake’s original $382 million stake worth well over $2 billion.