Fidelity (FIS) To Sell SunGard Units, Use Proceeds To Cut Debt

Fidelity National Information Services, Inc. (NYSE:FIS) is set to sell its SunGard Public Sector and Education businesses to Vista Equity Partners for $850 million. The deal is expected to close in first-quarter 2017.

The offloading of the units by the Jacksonville, FL-based company comes in line with its strategy to focus more on its core businesses of offering software, technology and processing services to the retail and institutional banking, payments, and asset and wealth management sectors.

Fidelity National stated in its release that the sale would include all SunGard Public Sector and Education solutions, which provide technology solutions to government entities and K-12 school districts.

Fidelity National mentioned that the two units were expected to contribute15–16 cents to its full-year 2017 adjusted earnings per share. The company intends to utilize the expected cash proceeds (net of taxes and deal-related expenses) of $500 million in reducing its outstanding debt.

Barclays (LON:BARC) PLC (NYSE:BCS) and BofA Merrill Lynch – a unit of Bank of America Corporation (NYSE:BAC) – served as financial advisors to Fidelity National.

Private equity firm Vista, which mainly invests in software, data and technology-based organizations, will run the public sector unit as an independent entity, while the education unit will become part of Vista-owned PowerSchool, a major provider of K-12 education technology solutions.

Fidelity National’s shares have gained 24.8% year to date, significantly outperforming the 3.6% growth for the Zacks categorized Financial Transaction Services industry. The company remains well positioned for growth on the back of its dominant position in the financial and payments solutions business, strategic acquisitions and partnerships and a recurring revenue model. Given its progress on the fundamentals, the stock should keep performing well in the quarters ahead.



Fidelity National currently carries a Zacks Rank #3 (Hold).

Vantiv, Inc. (NYSE:VNTV) is a better-ranked stock in the finance space. Over the last 60 days, the Zacks Consensus Estimate for the current year advanced 1.2% to $2.57. The company carries a Zacks Rank # 2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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