CyberSource to acquire Authorize.Net for $565M
Electronic-payment and risk-management services provider CyberSource Corp. will acquire Authorize.Net Holdings Inc., a provider of IP-based payment services, in a stock and cash transaction valued at about $565 million.
The acquisition joins two highly complementary businesses, positioning Mountain View, CA-based CyberSource to further capitalize on the growing Web-based payment opportunity.
"This is an investment in growth and scale," Bill McKiernan, chairman/CEO of CyberSource, said in a statement. "Each company has a strong brand, processing platform and team. This combination helps secure our leadership position and gives us more resources to bring innovative payment solutions to our customers and partners.
"We believe this combination creates a unique global platform to allow us to better serve the industry and positions CyberSource to support new business opportunities as more payment types migrate to web-based platforms," he said.
Both companies are leaders in enabling e-commerce businesses to accept online payments for goods and services. CyberSource, with about 20,000 customers, has traditionally focused on managing payments for midsize and enterprise customers. Marlborough, MA-based Authorize.Net, with more than 175,000 customers, has specialized in small businesses.
Collectively, the companies processed approximately 1.1 billion transactions in 2006, representing $65 billion of e-commerce. The acquisition will enable CyberSource to provide leading payment solutions to all segments of the e-commerce industry.
Under the agreement, Authorize.Net shareholders will receive 1.1611 shares of CyberSource common stock for every share of Authorize.Net common stock. Additionally, shareholders will receive a pro-rata share of about $125 million in the form of a cash payment.
The agreement was approved by the boards of directors of both CyberSource and Authorize.Net. Subject to obtaining applicable shareholder approvals and satisfaction of all regulatory requirements, the transaction is expected to close in late September or early October 2007.
Bill McKiernan will remain chairman/CEO of the combined entity; Scott Cruickshank will remain president and chief operating officer of CyberSource; and Roy Banks will remain president of Authorize.Net.
Upon the close of the transaction, Robert Donahue, currently a member of the board of directors of Authorize.Net Holdings Inc., will join the board of directors of CyberSource. In conjunction with the anticipated transaction, Scott Cruickshank, president and chief operating officer of CyberSource, has agreed to resign from the board of directors of CyberSource.