iPayment Inc. (NASDAQ/NM:IPMT) and First Data Corp. (NYSE:FDC) announced today that iPayment has completed the acquisition of a portfolio of merchant contracts from First Data's Merchant Services subsidiary for a sale price of $130 million in cash.
The acquisition will become effective on December 31, 2004. iPayment has expanded its revolving credit facility from $80 million to $180 million from Bank of America and JPMorgan Chase Bank to finance the purchase.
The portfolio has approximately 25,000 small merchant locations representing approximately $9 billion - $10 billion in annual charge volume. The transaction strengthens an existing strategic relationship between iPayment and First Data Merchant Services. The two companies will work together towards creating a preferred provider program across iPayment's agent network, which contributes to a growing base of more than 100,000 customers. It is anticipated that the preferred provider program will include First Data Gift Card Services, TeleCheck Services, debit payments and terminal deployment, service and leasing solutions. iPayment is currently a customer of First Data for processing and terminal deployment services.
Greg Daily, chairman and chief executive officer of iPayment, commented, "We are pleased to announce another successful step in iPayment's profitable growth strategy. iPayment will obtain a significant portfolio of small merchant accounts and gain access to a marketing channel of associations and credit unions that will continue to generate new merchant accounts not available through our existing relationships. We remain confident in our ability to execute our growth strategy in the fragmented small merchant marketplace."
Scott Betts, president of First Data Enterprise Payments, added "This sale is consistent with our merchant strategy to maximize our enterprise sales approach of providing multiple products and services through the right strategic relationships that are beneficial to our channels, merchants and shareholders. This expanded arrangement allows us to continue growing in the merchant business while continuing to provide our processing service to the merchants in this portfolio."