Payment Inc., a publicly held payment processor, agreed to be acquired by an entity formed by iPayment's Chief Executive Officer Gregory Daily and President Carl Grimstad, who plan to make iPayment privately held again.

On Dec. 27, 2005, more than seven months after Daily's initial proposal to buy the company, iPayment's board of directors and its special committee unanimously approved a shareholder buyout of $43.50 per share.

In May, Daily asked to acquire all the outstanding common stock of the company for $38 a share, but iPayment's board rejected the offer, saying it was too low. In November, he made another offer, this time for $43 a share.

Ten days later, he increased his bid to $43.50 a share, which he said was "the best price available" and his "last and final offer" (see "IPayment CEO Increases Bid to Buy Company," The Green Sheet, Nov. 28, 2005, issue 05:11:02, and GSQ, Vol. 8, No. 4, "The Changing Face of Card Acquiring," December 2005).

The transaction price of $43.50 per share represents an increase of $5.50 per share, or 14.5%, over Daily's original proposal of $38 per share and a premium of $11.95 per share, or 37.9%, over the $31.55 closing price of the stock on May 13.

The deal is expected to be completed in the first half of 2006, but there are still several contingencies including stockholder and regulatory approvals and receipt of the necessary financing to complete the transaction.

The merger will be financed through equity commitments of up to $207 million from Daily, Grimstad and other unnamed parties. Bank of America, N.A. and certain of its related entities have also committed $760 million.

In 2004, iPayment processed 157 million credit and offline debit transactions valued at $12.8 billion. For 2005, the company estimated it would process more than 188 million transactions valued at $15.4 billion.