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Software giant SunGard splits off availability services unit to PE backers

24 Jan 2014

Software group SunGard Data Systems is to hive off its availability services business on a tax-free basis to its existing stockholders, including its private equity owners.

Once the split-off is completed, the unit will be a separate company from SunGard and have its own board of directors. SunGard’s remaining software and processing businesses will consist of financial systems (SunGard’s largest business), public sector and K-12 Education.

SunGard is backed by private equity firms Silver Lake, Bain Capital, Blackstone, Goldman Sachs Capital Partners, KKR, Providence Equity Partners and TPG, which acquired the business for $11.4bn in 2005.

Russ Fradin, SunGard’s president and chief executive officer, said, “We believe a strategic separation of SunGard into two financially strong, independent companies will allow each to better focus on its distinct type of business and better pursue its own growth opportunities. While both businesses have been together as part of SunGard for a long time, they serve vastly different customer needs and have very different business profiles, with distinct capital requirements, sales forces and competitors. This separation will bring greater clarity and alignment to each company’s mission.”

Fradin added, “We are confident that two more focused and autonomous companies – each with significant size and capabilities – will be better positioned to drive long-term growth and value for customers, employees and investors. Both companies have compelling value propositions and growth opportunities as well as industry leadership positions, strong customer relationships, experienced management teams and specialized workforces. With each company having a strong footing from which to build and years of experience running independent operations within SunGard, the split-off should not have any impact on customers.”

Andrew Stern, currently chief executive officer of SunGard Availability Services, will become CEO of the independent company after the separation.

He said, “As an independent company with $1.4bn in revenue, we will have the scale, services and focus to continue bringing unique solutions to our customers’ availability challenges.”

Last year private equity firm Apax was said to be in talks with SunGard to acquire its data management unit, then part of its availability services business.

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