Rumors of FIS Buyout Cause Shares to Rise

Shares of Fidelity National Information Services rose for the second day in a row as rumors continued to circulate that the mortgage technology giant is in talks with the Blackstone Group LP concerning a buyout. In trading late Friday, FNIS' share price was relatively flat after soaring more than 15% Thursday-a day in which the Dow fell by almost 1,000 points before recovering. To date, Fidelity and Blackstone have declined to comment. Greg Smith, a managing director at Duncan-Williams Inc. who follows the sector, said he is "not overly surprised" that Fidelity would be an acquisition target, given "prior leveraged buyout interest" in the industry. For example, Kohlberg Kravis Roberts & Co. bought Fidelity competitor First Data Corp. for about $29 billion in 2007. First Data and its rivals have several features that are attractive to private-equity investors, including a "high degree of recurring revenue, strong free cash flow and relatively low valuations," Smith said. "I think you have all of that with FIS today." Last week Fidelity reported its first-quarter revenue surged 57.4% from the year earlier, to $1.25 billion, fueled by higher demand for its technology and its 2009 purchase of competitor Metavante Inc.