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SierraCities.com (Nasdaq: BTOB) rose 1 39/64 to 5 55/64 after the company agreed to be acquired by VerticalNet, Inc. (Nasdaq: VERT) for $133 million in stock. VerticalNet fell 1 11/16 to 27 13/16.
The stock swap values SierraCities at $7 per share.
Business-to-business (B2B) enabler VerticalNet said the acquisition of SierraCities, an online business credit company based in Houston, Texas, will give it the ability to provide credit and financing options to users of its 57 industry-specific online marketplaces. The newly acquired division will be known as VerticalNet Credit.
SierraCities uses its proprietary technology and the Internet to originate and service small-business equipment leases and term loans for amounts less than $100,000. The company's technology provides approval of online applications in less than two minutes and allows the borrower to receive funding in 24 hours.
Separately Tuesday, SierraCities reported third-quarter net income of $104,000, or one cent per share, down from $711,000, or 4 cents, in the year-earlier quarter. Revenue rose to $33.5 million from $27.2 million.
SierraCities has more than 95,000 active business customers, and its credit-scoring system is faster, cheaper and more accurate in assessing credit risk than traditional methods, VerticalNet says.
"Some of the barriers to conducting business online are assessing the credit worthiness of your trading partners, establishing credit and financing terms and providing a mechanism for payment," said VerticalNet president and chief executive officer Joe Galli. "This is why credit assessment, payment and financing services are key elements of our strategy of providing a broad range of business-to-business e-commerce enablement solutions to our customers."
Galli also said the acquisition will help VerticalNet by increasing customer satisfaction and driving e-commerce revenue higher.
The deal is also expected to bolster the company's cash position as the SierraCities operations are integrated with VerticalNet's system and the loans are structured to minimize exposure to credit risk.
The companies expect to complete the deal by the end of the year.
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