iPayment Board Rejects $38-Per-Share Offer from CEO As Undervalued

An offer from Gregory S. Daily, chief executive of Nashville, Tenn.-based processor iPayment Inc., to buy the company has been rejected by the company as too low. A special committee of iPayment's board of directors announced Friday that Daily's offer to buy all outstanding stock for $38 per share, which he advanced in May (Digital Transactions News, May 17), “undervalues the long-term prospects of the company.” Shares of iPayment, which trade on the Nasdaq, closed Friday at $36.99 per share and have traded in a $30-to-$51 range over the past year. The committee says it will look into other alternatives, including a sale of the company to other “potentially interested purchasers” and a recapitalization, as well as taking neither action. According to a statement released by iPayment, Daily, who withdrew his offer after hearing of the committee's decision, said he would engage in any process the board decides upon but in return asked for waivers that would allow him to talk to members of management who are also stockholders. The committee refused “in order to ensure that members of management are not perceived to be supporting a transaction with Mr. Daily as compared to a transaction with other potential bidders,” the statement says, without naming any such bidders. The statement says the board has made no decision yet regarding a sale, recapitalization, or other transaction. The company, which has been an active acquirer of merchant portfolios over the past two years, processes credit and debit card transactions for 130,000 small merchants across the country, including both card-present and Internet retailers.