Wednesday, January 2, 2008
But the year ended well for both companies; a second pass at the agreement was confirmed in December 2007.
Intuit, the originator of financial software such as QuickBooks, Quicken and TurboTax, signed an agreement to acquire ECHO. Intuit will pay $17 for each share of ECHO's common stock, including shares issued upon exercise of options. The total purchase price is approximately $131 million, fully diluted.
With the merger, Intuit will have the opportunity to expand its payment offerings by providing check services to customers. It will also be able to offer such solutions to merchants as automated clearing house (ACH); debit, credit and gift cards; and check verification, collection, guarantee and conversion.
"ECHO's leading technology solution and team of payment industry professionals, coupled with Intuit's focus on easy to use solutions, will help the combined company to deliver new and innovative products to customers," said Chuck Harris, ECHO's Chief Executive Officer.
In the previous acquisition attempt, Intuit agreed to pay $18.75 per share for ECHO stock, bringing the purchase total to $142 million. However, the agreement was terminated in March 2007 after ECHO settled a federal Internet gambling investigation to the tune of $2.3 million. (For more information, see "Intuit – Echo kaput, fed crackdown afoot," The Green Sheet, April 9, 2007, issue 07:04:01)
ECHO paid the settlement as a nonprosecution offer for its hand in processing Internet wallets, which allowed consumers to use funds to participate in online gambling. When the Unlawful Internet Gambling Enforcement Act was signed into law in October 2006, ECHO stopped most of its business with such Internet sites and has since ceased all interaction with such sites.
Since then, ECHO has refocused the nature of its business, concentrating on compliance with government laws, as well as continued growth. With the changes, ECHO and Intuit agreed that conditions were stable for a successful acquisition.
"Since our last discussions with ECHO, we've continued to survey the market and believe today, as we did then, that ECHO is a great strategic fit for Intuit," said Brad Smith, Senior Vice President and General Manager of Intuit. "We expect ECHO's technology and operational assets will help us accelerate Intuit's growth and strengthen our expanding small business ecosystem that includes the fast-growing payments space."
The new agreement is expected to close in the first quarter of 2008 and will be subject to regular reviews, ECHO shareholder approval and other routine closing conditions. Once it has closed officially, ECHO's stock will stop trading and the company will become a fully owned subsidiary of Intuit.
The proposed acquisition was approved by both companies' boards of directors.
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