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E-commerce service provider Digital River (Nasdaq: DRIV) said Monday that it has completed its acquisition of assets and customer contracts related to Beyond.com's eStores business.
Beyond.com (Nasdaq: BYND) will offload those assets in exchange for approximately US$2.9 million in Digital River common stock.
"We plan to continue to leverage [our outsourcing] model in pursuing software publishers that are not currently outsourcing, as well as other verticals, including manufacturing and distribution," Digital River CEO Joel Ronning said.
Santa Clara, California-based Beyond.com first announced the sale in January, when it filed a voluntary petition for relief under Chapter 11 of the U.S. Bankruptcy Code.
Revenue Boost
As a result of the closing, Minneapolis, Minnesota-based Digital River increased its 2002 revenue guidance to $72 to $75 million -- $2 million more than previously predicted.
Digital River said the acquisition will bolster its e-commerce outsourcing services aimed at software and digital commerce publishers.
Revised Acquisition
According to January's original acquisition agreement, Digital River was to acquire substantially all the assets of Beyond.com's eStores and Government System Group businesses.
But because closing conditions could not be met for the Government System Group -- which provides digital software distribution to U.S. government agencies -- the two firms amended the agreement in February so that Digital River would acquire only Beyond.com's eStores business.
Beyond.com is looking for a new buyer for its Government Systems Group business.
Year Ahead
Last week, Digital River released first-quarter revenue expectations of $18 million. That number fell short of previously announced estimates.
The company said it expects the Beyond.com acquisition will be neutral to its earnings in the first quarter of 2002 and will contribute to earnings commencing in the second quarter.
Including the impact of $2.5 million in first-quarter charges related to pending litigation and the consolidation of its San Jose, California office, Digital River predicted that its earnings per share, prior to amortization of acquisition-related expenses, will be 15 cents to 17 cents for the year.
Evolutionary Changes
Launched in 1994 as Software.net, Beyond.com's original offering was an online retail store. In recent years, however, the company focused on building, hosting and managing online stores for such clients as McAfee.com, Interact Commerce, PGP Security, Sybex and Sonic Solutions.
In recent months, Beyond.com sought additional capital to strengthen its balance sheet and satisfy debt obligations, but the company was unable to secure necessary financing.
Digital River will not assume the liabilities of Beyond.com other than those under client contracts. The agreement also provides Beyond.com with the opportunity for an earn-out of additional shares of Digital River common stock.
Digital River provides e-commerce strategy, site
development, hosting and other services to a client
base that includes Symantec (Nasdaq: SYMC), Motorola (NYSE: MMI), Fujitsu, 3M,
Siemens, Novell and Staples.com.
