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It wasn’t just another Monday for processor First Data Corp. The company started its new life as a private company by completing its widely watched, $29 billion leveraged buyout, and it installed a new management team under new chairman and chief executive Michael D. Capellas. Edward Labry, the head of First Data’s merchant-processing unit, emerged as the new boss of all U.S. operations.n
The buyout by New York City-based private-equity firm Kohlberg Kravis Roberts & Co., first announced April 2, became a test case for other pending LBOs as the credit markets cratered over the summer. That’s when worries about defaults in the subprime mortgage market started spreading throughout the economy and gave banks pause before financing corporate takeovers. Despite some apparent concessions in KKR’s financing package reported in the financial press, First Data and KKR still met their goal of completing the deal before Sept. 30. “That’s testimony to the strength of the company’s business and the ability to weather the changes in the financial structure,” says payments consultant Steve Mott of Stamford, Conn.-based BetterBuyDesign.
The now heavily leveraged First Data will be led by tech-industry veteran Capellas, who as planned succeeded the retiring Henry C. “Ric” Duques as chief executive upon the deal’s completion (Digital Transactions News, July 10). But the KKR buyout also moved the star of Labry a notch higher. Labry, who came to First Data in 2004 when the processor bought his company, Concord EFS Inc., not only is the head of all U.S. operations, but also his merchant unit is now combined with what has been called First Data Financial Institution Services, the slow-growing division that services credit card issuers. David Bailis, the head of Financial Institution Services, has left the company “to pursue other opportunities,” a spokesperson tells Digital Transactions News via e-mail.
When Duques embarked upon a companywide reorganization in early 2006, Labry made a point of improving First Data’s frayed relations with independent sales organizations and looking for new growth markets. “He’s got incredible credentials with customers,” says Mott. “If [Capellas and KKR] want to come strong out of the block, he’s the guy.”
First Data’s third and fastest-growing division, First Data International, also has a new boss, David Yates, who had been president of the company’s Europe, Middle East and Africa region. The fate of his predecessor, Pamela H. Patsley, was unknown late Monday afternoon.
Two other top executives are joining First Data: Tom Bell as executive vice president and chief strategy officer, and Grace Chen Trent as executive vice president of marketing and communications. Bell is a 25-year veteran of consulting firm Accenture, where he was managing director of the communications and high-technology practice. Trent most recently was senior vice president of communications at telecommunications firm MCI, where Capellas was chief executive from 2002 to 2006.
Although First Data shares no longer will trade on the New York Stock Exchange, the spokesperson expects First Data will continue to file quarterly and annual reports with the Securities and Exchange Commission because of its publicly traded bonds.
