Seeking investors eager to profit from the nascent electronic-commerce business, Checkfree Corp. announced last week that it is planning an initial public offering of stock.
The Columbus, Ohio-based payment services company said that it has filed a registration statement with the Securities and Exchange Commission to float up to 6.9 million shares of common stock, expected to be priced at $14 to $16 per share.
Checkfree plans to issue about 3.8 million shares, while existing stockholders would sell around 2.2 million shares.
If the offering is fully subscribed, it will raise about $110 million. Approximately $52 million will be net proceeds to the company, officials said.
The stock offering, which is expected to begin trading on the Nasdaq market in early October, is being managed by underwriters led by Lehman Brothers, Alex. Brown & Sons Inc., Volpe, Welty & Co., and the Ohio Co.
After the offering, Checkfree will have 30.7 million common shares outstanding, giving it an initial market value of about $460 million.
According the SEC registration statement, the company has been modestly profitable over the past two years, though its revenues have grown dramatically.
In 1994, the company had a $486,000 in net income on $39.3 million in sales, compared with a profit of $1.0 million and revenues of $30.9 million in 1993. For the first six months of 1995, Checkfree had $23.6 million in revenues and net income of $75,000, compared with $19.1 million in revenues and $193,000 in profits in the corresponding period last year.
The pending stock sale follows a number of successful stock offerings from technology firms hoping to carve out a niche in the emerging market of electronic commerce, where consumers and businesses pay for goods and services using computers, telephones, and eventually interactive cable television systems.
One of these companies, software firm Netscape Communications Corp., saw its stock rocket from the IPO price of $28 per share nearly $75 on the first day of trading earlier this month.
"There's a lot of money chasing a limited number of (investment) plays in electronic commerce," said Richard K. Weingarten, an analyst with Montgomery Securities in San Francisco. "And Checkfree is right in the middle of it."
However, the company noted in its SEC filing under "risk factors" the possible negative impact of the termination of a cooperative marketing agreement last month with Intuit Inc., the maker of the personal finance software Quicken.
Under the now defunct arrangement, users of the top-selling PC program could make payments via Checkfree. Intuit decided to end the relationship after it acquired a Checkfree competitor, National Payment Clearinghouse Inc., last year.
In response, earlier this year Checkfree filed suit against Intuit, claiming the acquired firm, now called Intuit Services Corp., infringed on a patent Checkfree received covering its bill payment process.
"Historically, Quicken has been the largest source of new consumer customers for Checkfree," the company said in the registration statement, noting that Quicken users accounted for 23% of the company's revenues in 1994.