United Online To Pay More Cash for FTD

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United Online Inc. has exercised an option in its $434 million acquisition of FTD Group Inc. that not only will save the online service money, but puts more cash in the hands of the florist chain’s shareholders upfront, the companies said Thursday. However, the total value to the shareholders will be less.

Woodland Hills-based United Online said in April that it would acquire FTD in a deal that originally valued the Downers Grove, Ill.-based floral retailer at $15.08 a share in a 12 premium to FTD’s share price at the time. In the original deal, United Online combined cash, United Online stock and debt, but had the option to replace its senior secured notes with additional cash if the company was able to arrange the financing.

United Online said Silicon Valley Bank now has committed to a $60 million loan to help fund the cash portion of the deal. The loan’s interest rate will cost the company less than the 13 percent it would have had to pay on the notes, according to filings related to the deal.

The new terms gives FTD shareholders $10.15 in cash plus 0.4087 of a share of United Online for each FTD share. That’s $2.81 more in cash than under the original plan. Based on United Online’s closing price of $10.35 on Wednesday, the deal value is $14.38 per FTD share.

Acquiring FTD, which has a growing online floral business, will reduce United Online’s dependence on its discount Internet access services NetZero and Juno, which would then account for less than 25 percent of the company’s overall revenue mix

United Online shares gained 5 cents on Thursday, were down 2 cents to $10.38 in midday trading on the Nasdaq.

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