An accretive acquisition! Saw this on YAHOO boards today.
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PRU comments on DRIV's acquisition
by: drivalong 01/04/02 02:22 pm
Msg: 61678 of 61684
HIGHLIGHTS
· Digital River (DRIV) announced it has acquired the customer assets of FreeMerchant.com (formerly ShopNow) from Network Commerce, Inc. for $875,000 in cash.
· DRIV will acquire approximately 3000 subscription-based business customers, but will not assume any Network Commerce personnel in the deal.
· FreeMerchant.com is a technology service provider offering web hosting and design, promotional support, email services, and e-commerce to small and mid-sized businesses.
· The company offers four levels of service, and we believe that average revenue per customer is approximately $35 per month, which would translate into $1.2 million in annual revenues. DRIV stated that the acquisition would be immediately accretive, and we believe it could add between $0.02 and $0.03 to full-year 2002 proforma EPS.
· We reiterate our Buy rating and $25 price target on DRIV.
DISCUSSION
DRIV Announces The Acquisition Of FreeMerchant.com Customers…
On January 4, 2002, Digital River (DRIV) announced it has acquired the customer assets of FreeMerchant.com from parent Network Commerce, Inc (NWKC- $0.16, not rated), for $875,000 in cash.
Under the terms of the agreement, DRIV will acquire approximately 3000 subscription-based business customers. In addition to the $875,000 purchase price, Network Commerce has the opportunity to earn additional compensation on revenues generated above a certain level. DRIV will not assume any Network Commerce personnel in the deal.
FreeMerchant.com is a technology service provider offering web hosting and design, promotional support, email services, and e-commerce to small and mid -sized businesses. Prior to May 2000, the company was known as ShopNow. The company offers four levels of service, ranging in price from $9.95 per month to $99.95 per month. We believe the average revenue per customer is approximately $35 per month, which would translate into roughly $1.2 million in annual revenues. DRIV stated that the acquisition would be immediately accretive, and we believe it could add between $0.02 and $0.03 to fullyear 2002 proforma EPS. At this time, we will maintain our full-year 2002 proforma EPS estimate of $0.42 (well above management guidance of $0.35 to $0.38).
We will review our estimates on January 29, 2002, when the company holds its fourth-quarter conference call and provides further details on the financial impact of the deal.
We reiterate our Buy rating and $25 price target on DRIV. |
