- Internet Capital Group Inc. (NasdaqNM:ICGE - news) said on Tuesday it acquired a controlling stake in PaperExchange.com Inc., an operator of an online marketplace for the pulp and paper industry, for about $170 million in stock.
Separately Tuesday, PaperExchange filed with the Securities and Exchange Commission to withdraw plans for an initial public offering. The Boston-based company cited current market conditions, as well as a change in ownership.
Wayne, Pa.-based ICG, an incubator of Internet business-to-business companies, exchanged 4.8 million shares for 63 percent of privately held PaperExchange, raising its total stake in PaperExchange to 83 percent.
``That's huge,'' Credit Suisse First Boston analyst David Dusenbury said of the deal. ``I think that's consistent with the message they have given, 'To increase our position with companies that that make sense to us.'''
Shares of ICG rose $3-11/16, or more than 10 percent, to close at $39-1/16 on Nasdaq.
Last month, ICG said it planned within two to four years to pare down its ownership to 15 to 20 core companies, in which it would hold a 50 to 100 percent stake. That was a change from its previous strategy of having stakes, if not majority stakes, in leading b-to-b companies within the top 50 markets.
To accomplish the strategy, company officials then said ICG would identify companies that are not performing well and channel more funds into ones that are.
PaperExchange becomes the 12th company in which ICG has a controlling interest. ICG holds a stake in 77 companies.
``Clearly, I view it as a positive,'' said Andrew Wilcox, analyst with J.P. Morgan.
The new funding allows PaperExchange to strike new alliances, acquisition and mergers, said John Castleman, ICG director of operations.
``We're really kind of getting started,'' Castleman said.
ICG said it acquired the new stake from existing shareholders, including the Kraft Group, which will continue to own about 10 percent of the company. Robert Kraft will continue as chairman, while Kent Dolby will continue as chief executive.
PaperExchange, whose revenues increased 78 percent from the first quarter to the second, has nearly 7,000 registered members in more than 80 countries, |
