Marshall & Ilsley, Wisconsin's largest bank, announced a plan to split Marshall & Ilsley and its payment-processing unit, Metavante, into two independent public companies.
M&I said Private equity firm Warburg Pincus has agreed to invest $625 million to acquire an equity stake of 25% in Metavante.
Upon completion of the transaction, Marshall & Ilsley shareholders will receive one share of Marshall & Ilsley stock and one share of Metavante stock for every three shares of Marshall & Ilsley stock held.
About $1.75 billion of new Metavante Corp. debt will be arranged by J.P. Morgan Securities Inc. and Morgan Stanley.
Metavante sells check processing and electronic payments services and handles transactions for the NYCE automated teller machine network. It generated 40% of M&I's $3.4 billion in revenue, but a fifth of its $1.2 billion pretax profit.
M&I came close to floating Metavante in a 2000 IPO, but the offering was pulled when the stock market began to tumble.
On Sunday, private equity firm, Kohlberg Kravis Roberts announced a deal to buy out credit card and payments processor First Data