Intuit Inc. and Electronic Clearing House Inc., have signed a definitive agreement for Intuit to acquire ECHO. Under the terms of the agreement, Intuit will pay $17 per share in cash in exchange for each share of ECHO common stock, including shares issuable upon exercise of options. The total purchase price is approximately $131 million on a fully diluted basis.
ECHO, based in Camarillo, Calif., is a leading provider of electronic payment processing solutions, including check, debit card and credit card processing, as well as check verification, collection, and guarantee services and automated clearing house capabilities, or ACH.
Intuit had previously signed a definitive agreement to acquire ECHO in December 2006, but the parties mutually terminated the arrangement in March. Since that time, ECHO has refocused its business and addressed governmental concerns while continuing to generate revenue growth. With ECHO’s business changes and continued solid performance, the companies now agree that conditions are more favorable for a successful acquisition.
“Since our last discussions with ECHO, we’ve continued to survey the market and believe today, as we did then, that ECHO is a great strategic fit for Intuit,” said Brad Smith, senior vice president and general manager of Intuit’s small business group. “We expect ECHO’s technology and operational assets will help us accelerate Intuit’s growth and strengthen our expanding small business ecosystem that includes the fast-growing payments space.”
With ECHO’s ACH capabilities, Intuit will be able to round out its payment offering with check services. The company will be able to offer solutions to merchants that address the most commonly used payment methods, including credit card, debit card, ACH, gift card, check verification, collection, guarantee and conversion. The combined offerings will be designed to save merchants time and money and will continue to differentiate Intuit’s solutions from other electronic payment providers.
In addition, the acquisition of ECHO will expand Intuit’s sales and distribution channels and provide relationships with thousands of customers, including larger enterprise customers.
“Today, ECHO has strengthened its focus on delivering ACH and card technology that includes comprehensive payment processing services, a technology platform, and established relationships with customers and partners,” said Chuck Harris, ECHO’s chief executive officer. “ECHO’s leading technology solution and team of payment industry professionals, coupled with Intuit’s focus on easy to use solutions, will help the combined company to deliver new and innovative products to customers.”
The transaction is subject to regulatory review, ECHO shareholder approval and other customary closing conditions. It is expected to close in the first quarter of calendar year 2008, at which time ECHO will become a wholly owned subsidiary of Intuit, and ECHO’s stock will cease trading. Intuit expects the acquisition to be slightly dilutive in fiscal 2008 and 2009.
Officers and directors of ECHO entered into voting agreements with Intuit, pursuant to which the officers and directors agreed, among other things, to vote their shares of ECHO common stock in favor of the transaction.
The proposed acquisition was approved by the board of directors of each company. Wedbush Morgan Securities advised ECHO and rendered a fairness opinion in connection with the acquisition.
About Intuit Inc.
Intuit Inc. is a leading provider of business and financial management solutions for small and mid-sized businesses; financial institutions, including banks and credit unions; consumers and accounting professionals. Its flagship products and services, including QuickBooks®, Quicken® and TurboTax® software, simplify small business management and payroll processing, personal finance, and tax preparation and filing. ProSeries® and Lacerte® are Intuit’s leading tax preparation software suites for professional accountants. The company’s financial institutions division, anchored by Digital Insight, provides on-demand banking services to help banks and credit unions serve businesses and consumers with innovative solutions.
Founded in 1983, Intuit had annual revenue of $2.67 billion in its fiscal year 2007. The company has approximately 8,000 employees with major offices in the United States, Canada, the United Kingdom and other locations. More information can be found at www.intuit.com.
About Electronic Clearing House, Inc.
A merchant account with ECHO (www.echo-inc.com) provides a fully integrated payment processing suite, including credit card processing, electronic check conversion (ECC), eChecks (ACH), check guarantee, check verification, check collection, and debit cards. Merchants nationwide benefit from ECHO’s wide ranging payment services available through the Company’s dedicated sales force or through channels that include technology partnerships, banks, collection agencies and other acquiring entities.
