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CyberSource to Buy Authorize.Net

From the press release:

Electronic payment company CyberSource Corp. said Monday it will acquire Authorize.Net, a provider of electronic merchant services, for $565 million in cash and stock.

Under the terms of the deal, Authorize.Net shareholders will receive 1.1611 shares of CyberSource (nasdaq: CYBS - news - people ) common stock for every share of Authorize.Net. They will also share a payout of approximately $125 million in cash.

Based on its March 31 share count, the transaction values Authorize.Net at roughly $19.49 per share, representing a 16 percent premium to Friday’s closing price.

The deal is expected to add to CyberSource fourth-quarter 2018 earnings, excluding certain expenses.

Bill McKiernan will remain chairman and CEO of the combined company, while Scott Cruickshank will remain president and COO of CyberSource, and Roy Banks will remain president of Authorize.Net.

Robert Donahue, a current Authorize.Net board member, will join the board of directors of CyberSource, while Cruickshank agreed to resign from the board.

Authorize.Net, formerly known as Lightbridge (nasdaq: LTBG - news - people ), was founded in Provo, Utah in Nov. 1996. It is currently based in Marlborough, Mass. In 2018 , Authorize.Net earned $24.8 million, or 88 cents per share, and generated $95.6 million in revenue.

It will be interesting to see what a large company with a commerce background will do with a commodity like Authorize.Net. Authorize.Net already is the industry leading payment gateway provider but still could use some help fixing bugs and innovating new features. If Cybersource makes Authorize.Net a priority and outs resources behind it there is no reason to believe their market share wouldn’t continue to grow. Time will tell.

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2 Responses to “CyberSource to Buy Authorize.Net”

  1. Jestep

    Looking at it from the authnet resellers point of view, I could see authorize.net loosing a lot of it’s resellers. It will depend on how Cybersource markets their own merchant services in relation to authorize.net, and I’m sure that a lot of us will not be happy if Cybersource really pushes their own services through it.

  2. Jim Conners

    Absolutely. They already offer merchant services albeit at a high discount rate and pricing. Their leeway with resellers is pushed about as far it can before a backlash occurs. Ideally they’ll keep separated from their current offerings and still consider a core product worthy of dedicating resources to.

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