Fifth Third Bancorp, an Ohio-based diversified financial services company and Advent International, a global equity firm, have annouced that they have completed a joint venture transaction for Fifth Third’s processing business.
Advent is purchasing an approximate 51% interest in Fifth Third’s merchant acquiring and financial institutions businesses, most of the assets and operations of which are held by a limited liability company. The transaction is valued at approximately $2.35 billion before valuation adjustments by either party. Fifth Third will retain an approximate 49% interest in the LLC, and will also retain its credit card issuing business, which includes retail credit card and commercial multi-card services.
It said that Fifth Third will recognize a pre-tax gain of approximately $1.7 billion on the transaction. The transaction is expected to contribute an estimated $1.2 billion in Tier 1 common equity.
Credit Suisse acted as exclusive financial advisor, while Sullivan & Cromwell, Chapman & Cutler, Alston & Bird and Graydon Head & Ritchey acted as legal advisors to Fifth Third in this transaction. Morgan Stanley and Weil, Gotshal & Manges acted as financial and legal advisor respectively to Advent.
Charles Drucker, CEO of Fifth Third Processing Solutions, said: “Our clients will maintain the same industry-leading platform as before, working with the same team, delivering the same high caliber client service they are accustomed to. Reaction to this transaction from our clients has been very favorable, and our employees are also excited about the future of this company.”
