Internet postage provider Stamps.com announced today that it has acquired privately-held iShip.com for stock worth $300 million (US$).
The agreement will combine iShip.com’s Web-based multi-carrier shipping technology with Stamps.com’s core Internet Postage service, providing customers with one-stop access to mailing, shipping and tracking services, as well as label printing for such leading parcel carriers as the U.S. Postal Service and United Parcel Service.
The combined company will also enable carriers to reach new customers. iShip.com’s investors and strategic partners include Mail Boxes Etc., eBay, Intel and venture capital firm Draper Fisher Jurvetson and UPS.
Growing Need For E-Commerce Shipments
Under the terms of the agreement, Stamps.com will issue eight million shares of Stamps.com common stock for all outstanding shares, options and warrants of iShip.com. The acquisition, which will be accounted for under the purchase method of accounting, valued iShip.com based upon the closing price of Stamps.com on Oct. 22, 1999. The purchase has already been approved by the boards of directors of both companies and is subject to regulatory and shareholder approval from both companies.
“This acquisition will revolutionize the way mailing and shipping services are offered,” said Stamps.com CEO John Payne. “Eighty-five percent of all e-commerce packages are shipped through the U.S. Postal Service and UPS. Anchored by Stamps.com’s strong relationship with the U.S. Postal Service and iShip.com’s historic relationship with UPS, our new combined company is positioned to take advantage of the rise in e-commerce shipments.”
Stephen Teglovic, president and CEO of iShip.com, added that the merger will build a single marketplace on the Web for shipping and mailing services and information.
“As a combined company, we will be able to double our market opportunity and provide the most comprehensive service on the Internet to manage all mailing and shipping needs. The complementary technology that Stamps.com and iShip.com bring together, matched with strong management teams on both sides, will make this a great partnership for the mailing and shipping industries.”
Building Blocks Of E-Commerce Delivery System
Industry observers feel that Stamp.com’s acquisition of iShip is significant in that it underscores the trend of Internet companies joining forces to build the necessary infrastructure to assure that e-tailers will be deliver on their promises to streamline the buying process for consumers.
Nonetheless, while experts feel that the deal is significant, they are quick to point out that both companies face substantial competition in the e-commerce arena.
Analysts expect many similar deals to crop up over the next several weeks as the holiday shopping season heats up.
Rival Goes To Market
Coincidentally, direct rival E-Stamp (Nasdaq: ESTM) announced the launch of a $126 million brand marketing campaign today, indicating that the San Mateo, California-based company does not intend to be left in Stamps.com’s shadow. The campaign, which will include TV ads, represents some 65 percent of the company’s proceeds from its IPO earlier this month.
That dollar figure is a huge marketing commitment for a company that is just starting to sell its product. The target will be small and home office businesses, now a growing segment of the American workplace.
E-Stamp is backed by Microsoft and AT&T Ventures. The company reported a $12.4 million loss through the first half of the year.
About The Companies
iShip.com was founded in 1997 by the same management team that built UPS Online Professional, a powerful shipping and tracking program. The iShip.com technology allows customers to access multi-carrier shipping choices and convenience, with package pricing, shipping, and tracking right from the desktop.
The iShip.com services include online rate and service comparisons, including the U.S. Postal Service, UPS, Fed Ex and Airborne Express and the ability to purchase and print labels online.
Founded in 1996, Santa Monica, California-based Stamps.com provides an Internet Postage service. The company’s technology eliminates the need for specialized hardware by giving customers the flexibility to print postage over the Internet securely, accurately and fast.
Through partnerships with major companies such as America Online, IBM, Microsoft, Office Depot, Quicken.com and 3M, Stamps.com has been able to reach into the small office/home office and consumer markets.