TransFirst Inc., the payments firm that filed for an initial public offering in July, has drawn interest from potential buyers including CVC Capital Partners Ltd. and Total System Services Inc., or TSYS, people familiar with the matter said.
CVC approached Hauppauge, New York-based TransFirst after it filed to go public, prompting the company to gauge interest from TSYS and other possible suitors, said the people, who asked not to be identified because the matter isnt public.
TransFirst is backed by New York-based private-equity firm Welsh Carson Anderson & Stowe LP, which is seeking at least $1.6 billion in cash for the company, the people said. That asking price could be too rich for TSYS, one person said, which would need to use a combination of cash and stock.
Welsh Carson is expected to decide in the next several weeks whether to sell the company or follow through with the public offering, the people said.
Mergers and acquisitions in the payments industry have accelerated this year as providers expand to handle consumers growing preference for plastic over cash. FleetCor Technologies Inc. agreed to buy Thomas H. Lee Partners LP-backed Comdata Inc. for $3.45 billion in August. Vantiv Inc. agreed in May to pay $1.65 billion for Mercury Payment Systems, backed by Silver Lake Management LLC.
Exploring both a sale and an IPO, known as a dual-track process, can help propel a sale by pressuring buyers to act before an IPO puts the company in the hands of public investors. Mercury and Comdata both agreed to sell after filing to go public.
A representative for TransFirst declined to comment, as did a spokesman for TSYS. A representative for CVC didnt respond to a call and e-mail requesting comment.
TransFirst, which Welsh Carson acquired in 2007, processed more than $48 billion in payments for more than 200,000 businesses in 2013, according to its July prospectus filed with the U.S. Securities and Exchange Commission.
TSYS, of Columbus, Georgia, provides payment services to government and financial-services institutions. The company, a former unit of Synovus Financial Corp., paid $1.4 billion in 2013 for NetSpend Holdings Inc. TSYS dropped 1.3 percent to $31.01 yesterday in New York, giving it a market value of $5.8 billion.
London-based CVC agreed last year to buy online payment firm Skrill Group Plc from Investcorp Bank BSC.
GlobalCollect, another payments firm backed by Welsh Carson, in July announced that it had entered exclusive sale talks with Ingenico Group.