Citigroup to Buy Bisys to Expand Hedge-Fund Services

May 2 (Bloomberg) -- Citigroup Inc., the biggest U.S. bank, agreed to buy Bisys Group Inc. for $1.47 billion to expand the services it offers hedge funds and private-equity firms.
Citigroup will pay $11.85 a share and a special dividend of 15 cents a share at closing, the New York-based bank said in a statement. Shares of Bisys, based in Roseland, New Jersey, closed yesterday at $11.47. Citigroup said it will sell Bisys's retirement and insurance units to affiliates of buyout firm J.C. Flowers & Co., making the net cost of the deal $800 million.
The acquisition may speed Citigroup's push to serve so- called alternative funds, the fastest growing segment of the asset-management industry. The bank said it can offer banking, trading and investment-banking services to Bisys's hedge-fund and private-equity clients.
Bisys ``will extend our full-service client platform and reaffirm our focus on serving the needs of high-growth markets,'' Michael Klein, co-president of Citi Markets and Banking, said in the statement.
The transaction is scheduled to close in the second half of this year and is subject to approval by Bisys shareholders and regulators in the U.S., Ireland and Bermuda. The acquisition won't affect earnings in the first year and will add to profit thereafter, Citigroup said.
Citigroup's own investment bankers advised the bank on the transaction.
New York-based J.C. Flowers, run by founder and former Goldman Sachs Group Inc. executive Christopher Flowers, specializes in taking financial-services companies private. Last month Flowers led a group of investors in agreeing to buy student-loan provider SLM Corp., known as Sallie Mae, for $25 billion.