Intuit returns to acquire Echo
20 December 2007 | 4921 views | 0
Intuit is to acquire Electronic Clearing House (Echo) for $131 million in cash, nine months after terminating a previously-agreed $142 million offer for the US payment processor.
Under the revised deal, Intuit will pay $17 per Echo share, a 100% premium on the California-based processor's closing share price of $7.90 Wednesday.
The new bid comes a year after the parties agreed a previous $18.75 per share deal back in December 2006. That arrangement was scuppered in large part by a Federal government investigation into the use of Echos' Internet wallet service for online gambling. Echo entered into a non-prosecution agreement with the US Attorney for the Southern District of New York and agreed to give up an estimated $2.3 million in profit from processing and collection services provided to Internet wallet customers.
In a statment, Intuit says it has 'refocussed it business and addressed governmental concerns', since the last bid was effectively torpedoed by the government probe.
Brad Smith, senior vice president and general manager of Intuit's small business group states: "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."
The acquisition furthers Intuit's ambitions to move into the payments business and diversify away from its core personal financial software business.
Says Smith: "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."
With Echo's ACH capabilities, Intuit will be able to round out its payment offering with cheque services, he says. This will enable the company to offer services to merchants that address the most commonly used payment methods, including credit card, debit card, ACH, gift card, cheque verification, collection, guarantee and conversion.
The acquisition additionally expands Intuit's sales and distribution channels and provide new cross-sell opportunities with thousands of business customers, including larger enterprises.