Official Payments scores big payday
To be acquired by Tier Technologies for $74.5 mln
By Michael Baron, CBS.MarketWatch.com
Last Update: 4:02 PM ET May 31, 2002
NEW YORK (CBS.MW) -- Shares of Official Payments jumped Friday after the electronic payments technology firm agreed to a buyout offer carrying a healthy 50 percent premium.
Tier Technologies will acquire Stamford, Conn.-based Official Payments, which provides its technology for more than 1,200 government entities, for $3 per share in cash, or $74.5 million.
The stock (OPAY: news, chart) closed at $2.97, up 97, or 48.5 percent. Tier (TIER: news, chart) shares dipped 15 cents, or 0.9 percent, to $16.70 on the news.
Walnut Creek, Calif.-based Tier, a provider of business and information-technology consulting services, expects the deal to add to earnings on a pro forma basis for the first 12 months from closing. Assuming an Aug. 1 completion date, Tier projects Official Payments will also bring $45 million in cash and short-term investments to its coffers.
Factoring in the acquisition, Tier forecast that pro forma earnings from continuing operations will come in at 22 to 23 cents a share for the fourth quarter, on revenue of $32 million to $33 million. The company also projected a profit of $1.05 per share on revenue of $165 million to $170 million for the fiscal year ending Sept. 30, 2003.
"The acquisition of Official Payments is very synergistic with Tier," said James Bildner, Tier's chairman and CEO, in a press release. "It adds 1,200 state and local government clients, a new major contract with the IRS, a proven proprietary platform and a state-of-the-art data center to our business."
Moreover, the acquisition "brings our transaction-processing business to a new level by adding new revenue streams from state and local taxes, fees, fines, utility payments and more," he said. "We also see an opportunity to pursue similar electronic transaction payment processing business in other commercial areas, such as tuition and utility payment processing."
Tier expects to retain the Official Payments' brand, as well as its existing sales, marketing, engineering, and customer service operations. Tier also said it would like to sell its consulting services to Official Payments' client base.
Michael Baron is a reporter for CBS.MarketWatch.com based in New York |
