SAN JOSE, Calif. and MOUNTAIN VIEW, Calif., Oct. 10 /PRNewswire-FirstCall/
-- eBay (Nasdaq: EBAY) and VeriSign (Nasdaq: VRSN) today announced a strategic
alliance that calls for the two companies to collaborate on payment services
and security initiatives for e-commerce. Under the terms of the agreements,
PayPal, an eBay company, will acquire VeriSign's payment gateway business and
combine it with PayPal's leading merchant services platform. VeriSign will
also provide eBay and PayPal with a suite of security services that includes
the deployment of two-factor authentication, a security system that gives
customers a one-time password or digital certificate to help protect against
online identity theft.
With the acquisition of VeriSign's payment gateway, which processed more
than $40 billion in total payment volume in 2004, PayPal plans to accelerate
its merchant services business by expanding its customer base to tens of
thousands of new small and medium-sized business customers online. The
payment gateway is a real-time, scalable Internet payment platform that allows
merchants to authorize, process and manage online payments. The combination
of VeriSign's payments gateway with PayPal's existing services will provide
merchants with multiple processing choices from a single provider, including
VeriSign's gateway, PayPal's Website Payments Standard, Express Checkout or
Website Payments Pro.
Additionally, eBay and VeriSign have signed a multi-year security
technology agreement that calls for eBay to invest in the deployment of
VeriSign technologies that enable and protect online transactions, including
the purchase of up to one million two-factor authentication tokens. eBay and
PayPal plan to begin the rollout of two-factor authentication to customers in
2006, including marketing and security programs designed to promote customer
adoption.
"VeriSign's payment gateway is a popular and market-proven product that
perfectly complements PayPal's existing payment services," said Jeff Jordan,
president of PayPal. "We're very excited about the opportunity to extend the
benefits of PayPal's services to the VeriSign customer base. This acquisition
allows PayPal to give our customers more choice in payment services and grow
our merchant services business even more quickly."
"At eBay, we're always looking for additional tools and technologies to
improve the security of our community's accounts and ensure the privacy of
information. Two-factor authentication will be another important way
customers can shop safely on eBay and pay with PayPal," said Rob Chesnut,
senior vice president of trust and safety for eBay. "We're thrilled to be
working with VeriSign, and are proud to be one of the first e-commerce
companies to give our customers access to two-factor authentication."
"The alliance between VeriSign and eBay brings together two leaders in
online commerce. eBay's deployment of two-factor authentication will represent
one of the largest consumer authentication deployments in the industry," said
Stratton Sclavos, chairman and chief executive officer, VeriSign. "After the
asset sale of our payment gateway business, VeriSign will continue to focus on
our core mission of enabling and protecting all forms of digital interactions.
In addition, the acquisition provides our worldwide merchant base with the
benefits of PayPal's already robust payment capabilities."
PayPal will pay approximately $370 million to purchase VeriSign's payment
gateway business, payable in cash and/or eBay stock. Including synergies with
PayPal's merchant services business, the payment gateway business is expected
to generate an incremental $100 million of revenue at a 20 percent pro forma
operating margin in 2006.
VeriSign will provide financial guidance regarding the transaction and its
impact to future guidance upon closing.
The acquisition is subject to regulatory and other approvals, and is
expected to close in the fourth quarter of 2005.
About VeriSign
VeriSign, Inc., operates intelligent infrastructure services that enable
and protect billions of interactions every day across the world's voice and
data networks. Additional news and information about the company is available
at http://www.VeriSign.com.
About PayPal
Founded in 1998, PayPal, an eBay company, enables any individual or
business with an email address to send and receive payments online securely,
easily and quickly. PayPal's service builds on the existing financial
infrastructure of bank accounts and credit cards and uses one of the world's
most advanced proprietary fraud prevention systems to create a safe, global,
real-time payment solution. PayPal has nearly 79 million accounts and is
available to users in 56 markets around the world. More information about the
company can be found at https://www.paypal.com .
About eBay
Founded in 1995, eBay pioneers communities built on commerce, sustained by
trust, and inspired by opportunity. eBay enables ecommerce on a local,
national and international basis with an array of websites -- including the
eBay Marketplace, PayPal, Kijiji, Rent.com and Shopping.com -- that bring
together millions of buyers and sellers every day.
Forward-Looking Statements
This announcement contains forward-looking statements regarding the
expected impact of the acquisition of VeriSign Payment Services on eBay's
financial results. Those statements involve risks and uncertainties, and
actual results could differ materially from those discussed. Factors that
could cause or contribute to such differences include, but are not limited to:
the receipt and timing of regulatory approvals for the transaction; the
possibility that the transaction will not close; the reaction of the users of
PayPal and the acquired payment gateway business to the transaction; the
reaction of competitors to the transaction; the future growth of the acquired
payment gateway business; and the possibility that integration following
closing will prove more difficult than expected. More information about
potential factors which could affect eBay's business and financial results is
included in the company's Annual Report on Form 10-K for the year ended
December 31, 2004, and Quarterly Reports on Form 10-Q, and other periodic
filings and prospectuses. All forward-looking statements are based on
information available to eBay on the date hereof, and eBay assumes no
obligation to update such statements.
Statements in this announcement other than historical data and information
constitute forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.
These statements involve risks and uncertainties that could cause VeriSign's
actual results to differ materially from those stated or implied by such
forward-looking statements. The potential risks and uncertainties include,
among others, the uncertainty of VeriSign's future revenue and profitability
and potential fluctuations in quarterly operating results due to such factors
as; eBay and PayPal's customer acceptance of VeriSign's services; the risk
that eBay and PayPal's deployment of VeriSign's services doesn't result in the
expected use of two-factor authentication by eBay and PayPal's customers; and
the inability of VeriSign to successfully develop and market new products and
services and customer acceptance of any new products or services. More
information about potential factors that could affect the company's business
and financial results is included in VeriSign's filings with the Securities
and Exchange Commission, including in the company's Annual Report on Form 10-K
for the year ended December 31, 2004 and quarterly reports on Form 10-Q.
VeriSign undertakes no obligation to update any of the forward-looking
statement after the date of this press release.
SOURCE VeriSign, Inc.
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Related links:
http://www.verisign.com
CONTACT:
Media Relations, Amanda Pires of PayPal,
+1-408-967-1005, or apires@paypal.com, or Brendan P. Lewis of
VeriSign, +1-650-426-4470, or brlewis@VeriSign.com; or Investor
Relations, Tracey Ford of eBay, +1-408-376-7493, or
tford@ebay.com, or Tom McCallum of VeriSign, +1-650-426-3744, or
tmccallum@VeriSign.com
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