Stamps.com Inc. (NASDAQ: STMP) was offered a deal it couldn’t turn down. And that didn’t work out.
The El Segundo, California-based provider of e-commerce shipping and mailing software said Friday that it has agreed to be taken private for $6.6 billion in cash, or $330 per share, by Thoma Bravo, a San Francisco-based private equity group specializing in software investments. The early-day announcement sent Stamps’ stock price surging as soon as the markets opened. Stamps’ stock was up more than $126 a share to $324.00 as of 3 p.m. EDT Friday, a roughly 64 percent rise over Thursday’s closing.
Barring a competing offer, which is conceivable under the terms of the deal, the transaction is likely to completion in the third quarter. Stamps’ board of directors and advisers have until August 18 to seek competing bids and can terminate the Bravo agreement if they find a better offer, according to a joint statement from the two firms.
According to Bravo’s website, it owns 51 companies in the IT sector. J.D. Power, a vehicle quality rating and marketing agency, and McAfee, a pioneer in cyber security software, are two of the company’s most well-known brands. Bravo manages a portfolio of around $78 billion in assets.
Access to Bravo’s financing would help Stamps “grab the burgeoning e-commerce shipping industry and strengthen our position as the premier worldwide multi-carrier e-commerce shipping firm,” according to Ken McBride, the company’s chairman and CEO. Stamps clients used its different software tools to transport 3.5 billion parcels worldwide valued at more than $19 billion in 2020, the firm said in a May presentation, a year of record e-commerce growth.
The U.S. Postal Service, Stamps’ initial customer and remains its largest, transported $8 billion domestically and internationally. According to Stamps, about $5 billion was transported domestically through other carriers in the United States, with the remainder traveling mostly abroad but outside the Postal Service network.
Stamps was founded in 1996 as an online printing and labeling service that gave customers an alternative to postage meters, stamps, and trips to the post office. Three years later, it became the first Postal Service-approved company to offer a software-only service that allowed customers to buy and print postage online. One of Stamps’ many partnerships is a negotiated service arrangement with UPS Inc. (NYSE: UPS), under which the company offers shippers discounts on UPS’ ground and second-day air delivery rates.
Stamps got in on the first floor of e-commerce and has expanded its product and geographic reach over the last quarter-century to meet rising demand for online buying and shipping. Shipping Easy, ShipStation, and Endicia are just a few of the parcel delivery-focused technology companies it has purchased. Stamps now has seven divisions, including its flagship business, which carries the company’s name.
Stamps and the Postal Service had an exclusive parcel reseller relationship until February 2019, when Stamps ended the part of the alliance that covered two of its units — the flagship Stamps.com business and Endicia, which provided high-volume users with label-printing software — because the Postal Service refused to let Stamps add other parcel carriers to its platform.
The potential loss of the postal business struck Stamps hard in the near term, with shares plummeting from $115 to $83 on the day the split was announced. However, the move was viewed at the time as a long-term gain to Stamps because it would allow the company to reach a larger audience.
For more than two years, shares have been on a meteoric rise, culminating in Friday’s enormous spike on the announcement of the Bravo acquisition.
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