KKR is offering $34 in cash for First Data (FDC), a credit card and payment processor. Oddly enough, the stock has moved up nicely over the last two weeks. It traded for $24.38 on March 19. On Friday, it hit $26.91. The company’s clients are dominated by large financial institions, so it is a company that can ill-afford to lose a big customer. That may be the company’s primary risk factor.

So, how is First Data worth 39% more than it was on March 19? It probably isn’t. But, KKR has money burning a hole in its pocket as do other large private equity firms.

If borrowing stays cheap and the markets keep rising, these bets may pay off.

Or, maybe not.

Douglas A. McIntyre