Citigroup to Buy Bisys for $1.45 Billion
Citigroup said it agreed to buy Bisys Group for $1.45 billion, and then sell two of the financial services processor's units to private equity firm J.C. Flowers & Co.
Bisys shareholders will receive $11.85 a share in cash, 3.3% more than the Tuesday closing price, plus a dividend of 15 cents a share, making the total purchase price $1.47 billion. The net cost to Citigroup will be about $800 million after the J.C. Flowers transaction.
Citigroup, the largest U.S. bank, will keep Bisys' investment services division, which includes fund services and alternative investment services units. It said the purchase will help it provide more services to hedge funds, mutual funds and private equity firms.
At closing, Flowers affiliates will acquire Bisys' retirement and insurance services units from Citigroup.
The transaction ends a nearly nine-month review of strategic alternatives by Roseland, New Jersey-based Bisys.
Last year, Bisys agreed to pay $25.1 million to settle a U.S. Securities and Exchange Commission probe into its payment of marketing and distribution costs for shares of some mutual fund clients. It also restated more than three years of results after uncovering accounting errors.
Citigroup's investment bank advised Citigroup on the transaction. Bear Stearns and the law firm Skadden, Arps, Slate, Meagher & Flom advised Bisys. Merrill Lynch and the law firm Paul, Weiss, Rifkind, Wharton & Garrison advised a committee of independent Bisys directors.