Citigroup announced last Wednesday that it will acquire BISYS Group for $1.45 billion in cash and divest its retirement and insurance services units to J.C. Flowers, a private equity firm, for $650 million. Citigroup will keep BISYS' fund and alternative investment units so that it can expand its services to hedge funds, mutual funds and private equity firms.
The sale confirms recent reports that BISYS, which had been on the block for nine months, would be sold in pieces.
Upon closing of the transaction, BISYS shareholders will receive merger consideration of $11.85 a share, a premium of 3.3% over BISYS' closing price the day before the sale was announced, in addition to a dividend of 15 cents a share.
"BISYS and Citi are a great fit," said Michael Klein, co-president of Citigroup's markets and banking division. "BISYS' investment services division propels Citi into a market-leading position in hedge fund administration and mutual fund servicing, and integrating it into Citi's global network will expand our full-service client platform and reaffirm our focus on serving the needs of high-growth markets, including private equity and hedge funds."
Citigroup's acquisition will afford BISYS clients "access to the full platform of capital markets and global banking solutions," said Robert Casale, chairman of the board and interim president and CEO at BISYS.
The sale is expected to close in the second half of the year.
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