UIL unit bounces to CheckFree

December 29, 2003
Daily Deal/The Deal, December 18, 2003
The utility gets $110 million for its walk-in payment business, while the e-billing specialist gains a retail footprint.
CheckFree Corp., an Atlanta-based electronic commerce products company, agreed Wednesday, Dec. 17, to buy American Payment Systems Inc. from New Haven, Conn.-based UIL Holdings Corp. for about $110 million in cash. American Payment, based in Wallingford, Conn., provides walk-in bill payment services to 200 corporate clients through more than 8,000 locations. It's on track to process about 120 million payments in 2003.
Under the terms of the deal, CheckFree will also buy American Payment's prepaid stored-value MasterCard business but not its prepaid telephony business, which is managed through a joint venture. American Payment Systems was profitable in the third quarter but reported a loss of $600,000 in the first nine months of 2003.
The two companies expect to close the deal before June 30.
CheckFree did the deal in-house. Chief financial officer David Mangum and vice chairman Mark Johnson, who oversees business development strategy and MA, negotiated the deal with legal advice from executive vice president and general counsel Laura Binion.
Morgan Stanley and law firm Wiggin & Dana LLP advised UIL.
Electricity distribution company UIL said it will use the proceeds to pay down debt. In October, UIL had lowered its guidance for 2003 due largely to problems at businesses other than utilities.
UIL added that the sale should allow American Payment to grow as part of a larger payment company. CheckFree chairman and chief executive Pete Kight agreed.
"CheckFree is the leading provider of electronic billing and payment services, but we do not reach the 20% of the U.S. population who pay their bills in person in retail locations around the country," he said in a statement, adding that American Payment's walk-in service will enhance the range of products that CheckFree can offer customers, as well as achieving economies of scale.