CEO Daily Succeeds in His Pursuit of Merchant Processor iPayment

Nashville, Tenn.-based merchant processor iPayment Inc. has agreed to be acquired and taken private by two of the company's top executives in a deal valued at about $770 million. The company's board of directors, along with a special committee of that board established last spring to investigate possible offers for the processor, have agreed to accept an offer of $43.50 per share from Gregory S. Daily, chairman and chief executive, and Carl A. Grimstad, president. Daily and Grimstad have obtained a commitment letter for $760 million from Bank of America Corp., and have made equity commitments of their own of up to $206.6 million, to finance the deal, which is subject to regulatory and shareholder approval, as well as completion of financing. The $43.50-per-share offer represents a nearly 7% premium over the company's closing price on Dec. 27 of $40.74. The acquisition, which would convert iPayment from a publicly held to a privately owned company, is expected to close some time in the first half of 2006. The company, originally incorporated in 2001, currently trades on the Nasdaq under the symbol IPMT. Daily, who owns 11.6% of iPayment, has been trying to buy the rest of the company since May, when he offered $38 per share. The board' special committee rejected that offer in July as undervalued but continued to seek bids for iPayment, which processes both card-present and e-commerce credit and debit card transactions for some 130,000 small merchants across the country. A statement released by the company says the board “solicited bids from a number of third parties” before accepting this latest offer from Daily and Grimstad, who are operating through an entity, called iPayment Holdings Inc., they established for the acquisition. The latest offer represents an increase of 50 cents a share over a $43 bid Daily made in November (Digital Transactions News, Nov. 7).