The Mountain View, Calif., payment processor CyberSource Corp. is buying Authorize.Net Holdings Inc. of Marlborough, Mass., to get a foothold in the small-business e-payments market.
CyberSource agreed to pay about $565 million in stock and cash.
Both companies serve e-commerce businesses, though CyberSource focuses on midsize ones.
"This really is an investment in growth and scale," said Bruce Frymire, its director of corporate communications and investor relations.
"CyberSource has historically had great strength in the middle-to-larger company customers; Authorize.Net has historically done very well at the smaller businesses and into the midsize businesses," he said. "There's very little overlap in the customers that we reach, and the goal here is full-market coverage."
Authorize.Net has more than 175,000 customers, and CyberSource has about 20,000, Mr. Frymire said. Last year the two companies processed about 1.1 billion transactions worth $65 billion.
Shareholders of Authorize.Net would receive 1.1611 shares of CyberSource common stock for each of their shares. They also would share in a cash payment of about $125 million.
Mr. Frymire said that CyberSource's direct-sale tactics were effective in attracting midsize customers but were not a good way to reach smaller ones.
"They have this very effective model of working through independent sales organizations," he said. "At the midsize to high end, we have a very effective model of direct sales."
It is still too early to discuss any changes that would be made to Authorize.Net, even in branding, Mr. Frymire said. "Both these organizations have been successful, and to that degree, if it's not broke, we're not going to fix it."
Robert Donahue, a director for Authorize.Net, would join CyberSource's board. Scott Cruickshank would remain CyberSource's president and chief operating officer but would resign from its board.
Bill McKiernan would remain CyberSource's chairman and chief executive. Roy Banks would remain the president of Authorize.Net, which would become a subsidiary of CyberSource.
The deal was reached Friday and announced Monday. It is expected to close in late September or early October.
