SureFire Commerce today announced a merger agreement aimed at improving the alternative payment provider's global reach and increasing its penetration in the interactive gaming industry.
SureFire announced Tuesday that it is entering into an agreement with privately-held ebs Electronic Billing Systems AG (EBS), a payment processor headquartered in Munich, Germany.
 |
"There is a long way to go before we have definite answers regarding what is happening in the U.S., but clearly the growth potential right now is in Europe and Asia for online gaming."
-Mitch Garber
SureFire Commerce
|
|
Under the agreement, SureFire could acquire 100 percent of EBS in exchange for approximately 63 percent of common shares of SureFire on a fully diluted basis.
EBS's parent company, EBS Holding AG, would be the largest shareholder of SureFire Commerce.
The merger is scheduled to take place in two phases. Initially, SureFire Commerce will acquire 51 percent of EBS in exchange for approximately 28 million newly issued shares of SureFire Commerce, representing approximately 21
percent of SureFire Commerce.
EBS Holdings AG could approve the sale of the remaining 49 percent of EBS to SureFire in exchange for approximately 151 million newly issued shares of Surefire Commerce. The option would have to be exercised before Dec. 31, 2003.
The merger announcement comes on the heels of one of SureFire's biggest competitors, PayPal, announcing it was getting out of the interactive gaming business.
Mitch Garber, executive vice president of business development for SureFire, said the merger, coupled with PayPal's change of direction, could put his company in the leading role among payment solution providers.
He said the merger will make SureFire a major force in the global payment processing market, with a strong management, customer base, supplier and technology presence in both North America and Europe.
Garber said the natural attrition of PayPal customers will see SureFire's ranks increase, but he said SureFire is actively pursuing PayPal's operators and users who are looking for new systems and alternatives.
Even more important than the fallout from PayPal though, according to Garber, is the international alliances that SureFire will gain through its merger with EBS.
"This is going to open up a lot of international banks, payment gateways and other financial institutions to us that weren't available at the same degree to us before," he said.
Like PayPal and other leading payment and transaction providers, SureFire has never limited itself to one industry, Garber said. But as more and more business opens up in Europe for interactive gaming vendors and operators, he said, the sector will continue to be a main focus for his company.
Things have gotten increasingly tighter for U.S. players wanting to fund their gambling activities via a credit card or other banking-type system, and Garber said SureFire's bottom line has been affected.
In March 2002, Garber said nearly 80 percent of SureFire's credit card activity in the gaming sector was generated from the United States. That number in September was down to just over 40 percent.
Conversely, he said, activity throughout the European market increased during this period, and SureFire wants to continue the trend, thereby decreasing its dependence on the U.S. market.
"I would like to get the number of American use down to below 20 percent," he said. "There is a long way to go before we have definite answers regarding what is happening in the U.S., but clearly the growth potential right now is in Europe and Asia for online gaming."
SureFire Commerce is listed on the Toronto Stock Exchange and will remain headquartered in Montreal, with an equally strong presence in Munich.
Garber said SureFire expects to make the necessary regulatory applications to consolidate its stock.
The transaction is subject to regulatory, stock exchange, shareholder and other approvals. The transaction is expected to close in early January 2003.
Upon closing, SureFire Commerce will consolidate EBS's operations into its financial
statements.