On Thursday, payment systems provider ACI Worldwide announced a deal to purchase all outstanding shares of online banking specialist Online Resources for $3.85 per share, cash -- a whopping 83% premium to where OR shares traded at yesterday's close.
In a statement, ACI characterized the merger as creating a single source offering financial institutions "the preeminent online and mobile banking, bill payment and presentment solutions," and noted that OR brings with it a customer base boasting "1,000 credit unions, billers, credit card issuers, and other credit and payment service providers."
ACI is acquiring the unprofitable OR for an exceedingly low multiple to both sales (0.4x) and book value (0.5x), when compared to its own price-to-sales ratio of 3.2, and price-to-book ratio of 3.9. This probably explains why, if OR's share price has spiked significantly, ACI's is doing pretty well, as well -- up 1%, to $47.49, at last report.
Combined, the two companies boast "pro forma revenue" of $860 million annually, and earnings before interest, taxes, depreciation, and amortization of $182 million. From a net profit perspective, however, annual income is closer to $22 million. ACI hopes to improve this number, in part, by extracting annual "cost synergies" of $19.5 million post-merger. The deal is expected to close by the end of Q1 2013.
The article ACI Worldwide to Buy Online Resources for $127 Million originally appeared on Fool.com.Fool contributor Rich Smith has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.