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May-01-2008United Online to Acquire FTD(topic overview)
CONTENTS:
- DOWNERS GROVE, Ill.--( BUSINESS WIRE )-- FTD Group, Inc. (NYSE:FTD), a leading international provider of floral related products and services, today announced that it expects its financial results for its fiscal 2008 third quarter ended March 31, 2008 to be approximately $192 million in consolidated revenue with resulting net income of $9 million and $0.31 in diluted earnings per share. (More...)
- Sure the company will have $1.14 billion in revenue once FTD is added in, but the interplay between United Online's units is a bit fuzzy. (More...)
- Separately, Internet service provider United Online (nasdaq: UNTD - news - people ) said it will purchase FTD as it looks to expand into the growing floral Internet business. (More...)
- Shares of FTD Group added 81 cents, or 6 percent, to $14.31 in electronic premarket trading. (More...)
- United Online intends to file with the Securities and Exchange Commission (SEC) a Registration Statement on Form S-4, which will include a proxy statement/prospectus of FTD and United Online and other relevant materials in connection with the proposed transaction. (More...)
- United Online may choose to increase the per-share cash consideration by $2.81 as a substitute for the senior secured debt. (More...)
- To fund the deal, United has enlisted Wells Fargo, which is committing $375 million in term loans to FTD, and a $75 million revolving credit facility for working capital requirements of FTD. Existing 7.75% FTD senior notes will be retired. (More...)
- Cummins said it would continue investing in opportunities round the world, while monitoring the U.S. economy closely and reiterated plans to invest between $550 and $600 million in capital expenditures globally. (More...)
- The company announced Wednesday that it will acquire FTD for $800 million ( Techmeme ). (More...)
- The company ' s definition of adjusted OIBDA has been modified from time to time. (More...)
- FTD Group will continue to run as a United subsidiary. (More...)
- Revenue for the first two quarters increased to $1.75 billion from $1.43 billion for the same period last year. (More...)
- The remaining purchase price consists of repayment of FTD indebtedness and expenses incurred in connection with the transaction. (More...)
- United also owns social network Classmates.com. (More...)
SOURCES
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DOWNERS GROVE, Ill.--( BUSINESS WIRE )-- FTD Group, Inc. (NYSE:FTD), a leading international provider of floral related products and services, today announced that it expects its financial results for its fiscal 2008 third quarter ended March 31, 2008 to be approximately $192 million in consolidated revenue with resulting net income of $9 million and $0.31 in diluted earnings per share. During the current year third quarter, the Company incurred expenses which reduced diluted earnings per share by approximately $0.07 related to abandoned acquisition opportunities in light of the pending acquisition by United Online, Inc., which was announced in a separate release this morning; expenses related to the pending acquisition by United Online, Inc.; and advisory costs incurred in conjunction with the resolution of a sales tax audit. This impact was partially offset by a $0.01 per diluted share reduction to the tax provision during the current year quarter which was primarily related to the expiration of a tax statute. [1] The Company believes EBITDA and Adjusted EBITDA provide useful supplemental information related to the Company ' s operations and results. For fiscal year 2008, the Company expects to reaffirm its previously announced annual revenue target of approximately $645 million. The Company expects that its previously announced annual targeted EBITDA (which excluded other income/expense, net) of approximately $98 million will be reduced by the approximately $4 million of expenses incurred in the third quarter as described above. This target does not include expenses that may be incurred in the fourth quarter related to the pending acquisition by United Online, Inc. The Company ' s targeted Adjusted EBITDA includes approximately $4 million of expense related to stock compensation associated with Statement of Financial Accounting Standards No. 123(R) and a deferred compensation plan at Interflora U.K. The Company expects targeted net income for the fiscal year to be approximately $39 million, or $1.31 per diluted share, a decrease from prior targeted net income of $40 million and $1.35 per diluted share. These new net income and diluted EPS targets reflect the expenses noted above but do not include any additional expenses that may be incurred in the last quarter of the year relating to the pending acquisition by United Online, Inc. The above targets are only estimates, which may be exceeded or alternatively may not be achieved. The Company will release its final financial results for its fiscal 2008 third quarter ended March 31, 2008 on Tuesday, May 6, 2008.[1]
A major Internet access provider agreed today agreed to purchase a floral and specialty gifts company for about $456 million in cash, stock and notes, according to news reports. United Online, Inc., operator of Juno and NetZero, told Reuters ( News - Alert ) that its proposed acquisition of FTD Group, Inc. reflects the upward trend of global sources moving to the Internet. "This transaction will meaningfully diversify our revenue base within a large global market experiencing significant migration to the Internet," United Online ( News - Alert ) Chief Executive Mark R. Goldston told The Wall Street Journal.[2] ' The international retail floral and gift company FTD Group, Inc. said on Wednesday it will be bought by Internet service provider United Online, Inc. for $456 million in cash, notes and stock.[3]
Internet service provider United Online -- the owner of NetZero and Juno -- plans to get into the flower business. It said it would pay about US$456 million in stock and cash to acquire FTD Group, the company that provides flowers and related services to about 20,000 retailers in the U.S., Canada, the U.K. and Ireland. The deal makes sense because the flower market is "experiencing significant growth in the Internet sector," and United will be able to drive its 50 million existing customers to FTD's Web sites, the two companies said in a joint statement.[4] United Online Inc. announced plans to acquire FTD Group Inc. for about $456 million in cash, stock and notes in a deal that will combine the operator of the NetZero and Juno Internet-service providers with a huge network of florists and floral-products suppliers.[5]
Nearly two years ago, the company acquired Interflora, a U.K. -based provider of floral-related products. Today's deal values FTD at $15.08 a share, a 12 percent premium to FTD's closing price Tuesday, according to WSJ. The offer is made up of $7.34 a share in cash, 0.4087 share of United Online and $3.31 worth of 13% senior secured notes, according to WSJ. United Online also has the option to remove the notes from the bid and replace them with additional cash, according to WSJ. FTD stockholders would own 15% of United Online, which is expected to see higher per-share net income from the deal starting in the second quarter of 2009, according to WSJ. After the deal closes, United Online plans to halve its dividend payment to 10 cents a share, according to WSJ.[2] Under the terms of the merger agreement, FTD stockholders will receive $7.34 in cash, 0.4087 of a share of United Online common stock ("United Online Stock") and $3.31 principal amount of United Online 13% senior secured notes due 2013 (the "Notes") for each share of FTD common stock in the merger, for a total value of $15.08 per share of FTD common stock based on United Online's closing stock price of $10.83 on April 29, 2008.[6] Under the terms of the merger agreement, United Online may elect to increase the per share cash consideration payable to FTD's stockholders by $2.81 in full substitution of the Notes, in which case FTD stockholders will receive a total of $10.15 in cash and 0.4087 of a share of United Online Stock in exchange for each share of FTD common stock in the merger, or a total value of $14.58 per share of FTD common stock, based on United Online's closing stock price of $10.83 on April 29, 2008. In such case, the total consideration to FTD stockholders will be approximately $440 million, consisting of $307 million in cash and 12.34 million shares of United Online Stock.[7]
The transaction requires the approval of FTD stockholders and is subject to a financing condition and customary closing conditions. Green Equity Investors IV, L.P. and FTD Co-Investment, LLC, affiliates of Leonard Green & Partners, L.P. which collectively own approximately 31.7% of the outstanding shares of FTD, have agreed to vote their shares in favor of the transaction, subject to the terms of a voting agreement. Following the closing of the transaction, United Online expects to decrease its regular quarterly cash dividend from $0.20 per share to $0.10 per share. The payment of future dividends by United Online is discretionary and will be subject to determination by its board of directors each quarter following its review of United Online's financial performance and other factors. Under the terms of the merger agreement, FTD has agreed to suspend all dividends on its common stock for 180 days after the date of the signing of the merger agreement. After the closing of the acquisition, FTD will continue to operate as a wholly-owned subsidiary of United Online from FTD's existing facilities, including its U.S. headquarters in Downers Grove, Illinois and its international headquarters in the United Kingdom.[6] As announced in a separate press release today, United Online and FTD Group, Inc. have entered into a definitive merger agreement providing for the acquisition of FTD Group, Inc. by United Online, Inc. Following the closing of the transaction, United Online expects to decrease its regular quarterly cash dividend from $0.20 per share to $0.10 per share. The payment of future dividends is discretionary and will be subject to determination by the Board of Directors each quarter following its review of the company's financial performance and other factors.[8]
WOODLAND HILLS, Calif. & DOWNERS GROVE, Ill.--( BUSINESS WIRE )--United Online, Inc. (Nasdaq:UNTD), a leading provider of consumer Internet and media services, and FTD Group, Inc. (NYSE:FTD), a leading provider of floral and related products and services to consumers and retail florists in the United States, Canada, the United Kingdom and the Republic of Ireland, announced today that they have entered into a definitive merger agreement providing for the acquisition of FTD Group, Inc. by United Online, Inc.[6] NEW YORK - United Online Inc, an internet service provider and parent of Classmates.com, announced plans on Wednesday to acquire FTD Group Inc, a provider of floral services and products, for about $800 million. Get stories by e-mail on this topic.[9] Woodland Hills-based United Online said this morning that it has agreed to acquire FTD Group, Inc, in a deal worth approximately $800M. FTD is a provider of floral and related products.[10]
Based on preliminary results, for the period ended March 31, earnings fell to $9 million, or 31 cents per share, compared with $9.6 million, or 32 cents per share, a year ago. Quarterly results were hurt by about 7 cents per share related to abandoned acquisition opportunities, the United Online deal, and other items; and were offset by a 1 cent per share reduction to its tax provision, FTD said.[11] The takeover, which totals $800 million when FTD debt and expenses are included, values FTD at $15.08 a share, a 12 percent premium to the florist's closing price on Tuesday. FTD shareholders will received $7.34 in cash, 0.4087 of a share of United Online stock and $3.31 of United Online's senior secured notes due 2013 for each share they own. United Online CEO Mark R. Goldston told analysts this morning that he intends to keep intact FTD's Downers Grove headquarters and much of its employee base. 'It's not our strategy to reduce manpower,' Goldston said.[12] FTD shareholders will receive $7.34 in cash, 0.4087 shares of United common stock per FTD share, and $3.31 principal amount of United Online in 13% senior secured notes due in 2013. This total consideration, before any share change in UNTD will equate to $15.08 (based upon $10.83 United share price. This furthermore comes to an total consideration received of $456 million to FTD, composed of $222 million cash, 12.35 million shares of UNTD, and $100 million in the debt.[13]
FTD shareholders will receive a combination of cash, stock, and United Online debt worth $15.08 per share, representing a 12 percent premium to yesterdays closing price for the company.[9] The total value comes at $15.08 per share of FTD common stock based on United Online's closing stock price of $10.83 on April 29, 2008.[14] Under terms of the deal, based on Tuesdays closing prices, United Online will pay a total value of $15.08 a share for each FTD stock outstanding, representing a 12% premium to Tuesdays closing price of $13.50.[15] The deal values shares in the Downers Grove, Ill. -based online florist at $15.08 each ' a 12 percent premium on FTD's closing price Tuesday. Separately, United Online said Wednesday that its first-quarter earnings will beat expectations.[16]
As part of the deal, FTD shareholders will receive $7.34 in cash, 0.4087 shares of United Online for each share held, and $3.31 of United Online notes, the companies said in a joint statement. United Online said the deal will diversify its revenue as more global sources move to the Internet.[17] The acquisition will provide additional revenue and help United expand into the growing floral Internet business, the company said. FTD shareholders will receive $7.34 in cash, 0.4087 of a share of United stock and $3.31 of United's senior secured notes due 2013 for each share they own.[18]
Under the terms of the agreement, FTD stockholders will receive $7.34 in cash, 0.4087 of a share of United Online common stock and $3.31 principal amount of United Online notes for each share of FTD common stock in the merger.[19] According to the firms, United Online will pay $7.34 in cash plus 0.4087 shares of Untied Online common stock, plus $3.31 in secured notes, for each share of FTD common stock.[10]
The total consideration to FTD stockholders will be approximately $456 million, consisting of $222 million in cash, 12.35 million shares of United Online Stock and $100 million aggregate principal amount of Notes.[14] FTD, the Downers Grove-based floral company, will be acquired by United Online Inc. for about $456 million in cash, notes and stock, the companies announced this morning.[12] Downers Grove-based FTD Group Inc. said Wednesday it has agreed to be acquired for $800 million in cash and stock by United Online Inc., the operator of NetZero and other Internet services.[19] United Online Inc. said Wednesday that it agreed to acquire flower- delivery service FTD Group Inc. for about $800 million in cash, stock and debt.[16] Here's a way to get out of the evaporating dial-up ISP business: United Online (UNTD), owner of low-cost ISPs NetZero and Juno, is acquiring mega-florist FTD Group (FTD) for $800 million in cash and stock.[20]
In one of the weirdest acquisition I've seen in a long time, United Online (UNTD) today announced it has reached a deal to buy FTD Group (FTD) for about $15.08 in cash, stock and debt. What makes this is a weird deal? Let me count the ways.[21]
Shares of FTD Group were down 0.07 percent to $13.49 on the New York Stock Exchange, while United Online fell 80 cents or 7.4 percent to $10.03. United Online Inc. also said preliminary first-quarter revenue beat its expectations.[9] Shares of FTD Group were up more than 7 percent to $14.50 on the New York Stock Exchange, while United Online rose nearly 8 percent to $11.68 on Nasdaq in trading before the bell.[17]
United Online ( News - Alert ), one of the larger remaining independents, decided some time ago it would become a portal. It has for years owned the social networking portal Classmates.com, and now United Online has reduced the Internet access portion of its business to 25 percent with the acquisition of FTD Group. United Online CEO Mark Goldston says he'll be able to market FTD products to United's user base of 50 million accounts.[22] A dialup-access business, a social network? why not add a flower business? United Online (NSDQ: UNTD), the ISP and parent of Classmates.com has announced the acquisition of FTD, the floral products company, for $800 million.[23] United Online is marrying up, buying FTD's stronger and slightly larger business, by revenue. The combined company will get only 25% of its annual revenue from Juno and NetZero, which are still attached to the dying market of dial-up Internet access. United Online CEO, Mark Goldston told Deal Journal that his company should get more credit for its successful record of acquisitions; United Online bought Classmates.com in 2004, for instance, and revamped the site to boost users to 50 million from around 38 million. "This could be another one of those contrarian deals that turns out to be a jewel," argues Goldston. "United Online has shown repeatedly that it can purchase Internet businesses that are underdeveloped and bring its marketing savvy and power of its Internet franchises to grow the revenue and profitability of businesses such as Juno, Classmates.com and MyPoints.com'.the company feels it can do that again with FTD." This isn't the only recent head-scratcher of a strategic deal, standing on the shoulders as it does of Blockbuster's bid for Circuit City and the biggest mystery of all: Microsoft-Yahoo. Blockbuster is much smaller than Circuit City, and both companies are operating at a loss: In 2007, Circuit City reported a loss of $321.4 million, and Blockbuster a loss of $74.2 million.[24] According to the companies, the deal will create a firm with combined revenues of $1,145M. The firms said that the acquisition of FTD will provide United Online with significant increase in scale, diversification from United Online's revenue streams, and ability to expand market opportunities. The shift comes as United Online looks to shift from its major businesses--its dial-up NetZero and Juno Internet access services.[10] Consider the Deal Journal's "Say What?" deal of the day: today's $465 million tie-up between United Online and FTD Group. United Online provides Internet access through its NetZero and Juno services, and flowers are sometimes sold over the Internet.[24] Internet service provider United Online Inc. said Wednesday it will buy FTD Group Inc., a florist network and Web site operator, for approximately $456 million.[18] There may be one of the stranger mergers out there today in Internet land, as United Online, Inc. (NASDAQ: UNTD) is acquiring FTD Group, Inc. (NYSE: FTD) in a merger valued at some $800 million.[13] NEW YORK (Thomson Financial) - United Online Inc. said it agreed to buy FTD Group Inc. in a deal valued at up to $800 million.[15]
The deal has the Woodland Hills-based Internet company paying $198 million in cash along with 12.4 million shares of United Online, worth about $132 million.[16] The Internet and media services company expects the acquisition of the floral products company to add to earnings in the second quarter of 2009. After the closing of the deal, which is expected to be in the third-quarter of 2008, United Online expects to cut its quarterly cash dividend in half to 10 cents a share.[15] After the closing of the deal, which is expected in the third quarter, the former FTD stockholders will own 15 percent of United Online. FTD will operate as a wholly owned subsidiary of United Online and will keep its United States headquarters in Downers Grove, Ill., and its international headquarters in the United Kingdom. Upon the close of the deal, United Online will reduce its regular quarterly dividend from 20 cents a share to 10 cents a share.[25] FTD stockholders will get 15% of United Online. United Online plans to halve its dividend payment to 10 cents a share after the deal is closed.[26]
The company said that affiliates of Leonard Green Partners, which owns 31.7% of FTD, have agree to vote in favor of the deal. After the deal, United will cut its dividend to 10 cents a share from 20 cents. United today said it now sees Q1 revenue of $121 million to $121.8 million, ahead of its previous forecast of $116 million to $120 million, with adjusted OIBDA of $38.1 million to $38.7 million, up from $30 million to $34 million.[21] The company sees adjusted EPS of 30-31 cents, above the Street consensus of 24 cents. FTD Group today said it expects to report revenue for its fiscal third quarter ended March 31 of $192 million, with profits of 31 cents a share.[21]
Fiscal year 2007 third quarter consolidated revenue was $183 million with resulting net income of $9 million, or $0.32 per diluted share, which included $0.02 in expenses related to the Company ' s secondary offering.[1] During the third quarter of fiscal year 2008, the Company recorded approximately $2 million of expenses related to abandoned acquisition opportunities, $1 million of expenses related to the pending acquisition by United Online, Inc. and approximately $1 million in advisory costs incurred in conjunction with the resolution of a sales tax audit. These expenses are not reflective of the Company's ongoing business.[1] The company said the company's latest quarter profits were reduced by 7 cents due to "abandoned opportunities in light of the pending acquisition" of the company and advisory costs related to a sales tax audit. FTD said it still sees full year revenue of $645 million; its EPS guidance for the full year is trimmed to $1.31, from $1.35.[21]
United Online anticipates that the FTD acquisition would result in pro forma combined company revenues of $1.145 billion and pro forma combined company operating income of $175 million for the 12 months ended December 31, 2007.[14] Significant Increase in Scale, resulting in pro forma combined company revenues of $1,145 million and pro forma combined company operating income of $175 million for the 12 months ended December 31, 2007. The pro forma combined company's stock based compensation, depreciation and amortization for such period would have been $68 million. Diversification of Revenue Streams, resulting in United Online ' s Communications segment revenues, which are principally driven by its NetZero and Juno Internet access services, representing less than 25% of total United Online revenues.[6]
The financing commitment includes $375 million of term loans at FTD, which will be funded at closing, and a $75 million revolving credit facility to provide for the ongoing working capital requirements of FTD. The remaining consideration will be financed with cash on hand at United Online and the issuance of the Notes and the United Online Stock.[6] Under that breakdown, the $456 million purchase price breaks down to $222 million in cash, 12.35 million shares of United Online stock and $100 million in notes.[25]
United Online will pay FTD holders $7.34 a share in cash, plus 0.4087 of a share of UNTD, plus $3.31 of 13% senior secured notes due 2013 for each FTD share.[21] The offer is made up of $7.34 a share in cash, 0.4087 share of United Online and $3.31 worth of 13 percent senior secured notes.[9] The per-share consideration includes $7.34 in cash, 0.4087 of a United Online share and $3.31 principal amount of United Online 13% senior secured notes due 2013.[15]
Source: United Online, Inc. WOODLAND HILLS, Calif., April 30, 2008 (PRIME NEWSWIRE) -- United Online, Inc. (Nasdaq:UNTD), a leading provider of consumer Internet and media services, today announced that its Board of Directors has declared a regular quarterly cash dividend of $0.20 per share.[8] The dividend is payable on May 30, 2008 to shareholders of record on May 14, 2008. This marks the thirteenth consecutive quarter that United Online will have paid a $0.20 per share cash dividend to its shareholders.[8] The company had not previously provided guidance for diluted net income per share and adjusted diluted net income per share. These financial results are preliminary and are subject to potential revision. As previously announced, United Online will formally release its first quarter financial results on May 6, 2008 after the market close. The company ' s decision to release preliminary financial results reflects management ' s desire to address its recent financial performance during an investor conference call and Webcast scheduled in connection with a strategic announcement.[27] The company expects to report GAAP diluted net income per share in the range of $0.18 to $0.19, and adjusted diluted net income per share (2) in the range of $0.30 to $0.31.[27]
Net income for the quarter rose to $190 million, or 97 cents per share, from year-ago $143 million, or 71 cents per share.[14] For the six-months, net income grew to $187.26 million or $2.46 per share from $175.53 million or $2.37 per share for the year before period.[14]
Excluding special items, income from continuing operations increased to $78.9 million or $0.82 per share from $62.5 million or $0.66 per share in the prior-year period.[14]
Analysts expect revenue of $118.8 million. It expects earnings between 18 and 19 cents per share, or between 30 and 31 cents excluding one-time items.[28] Analysts polled by Thomson Financial predict third-quarter earnings of 38 cents per share on sales of $192.8 million.[11]
On average, seven analysts polled by First Call/Thomson Financial expected the company to report earnings of $0.72 per share.[14] Looking forward, for the second quarter, the company expects earnings per share, excluding special items to be in the range of $0.73 to $0.83.[14]
The deal is expected to close in the third quarter and will add to United Online's earnings per share beginning in the second quarter of 2009, the companies said.[2] The deal is expected to be accretive to anticipated GAAP earnings per share beginning in the second quarter of 2009.[14]
The terms give FTD stockholders $15.08 per share based on United's closing price of $10.83 on Tuesday.[18] The deal values FTD at $15.08 a share, a 12% premium to FTD's closing price Tuesday.[26] You've seen cash deals, stock deals, and a combination of cash and stock. In this one, FTD shareholders will receive what was initially valued at $15.08 a share worth of United's stock, cash, and debt.[29] United Online's stock fell 1.4% to $10.68, while FTD rose $1.9% to $13.75, still 5% below the $15.08 per-share value of the deal.[24]
United Online's proposal of $15.08 a share offers nearly a 12 percent premium to FTD's Tuesday close of $13.50.[17]
Goldston said California-based United Online, the operator of NetZero and Uno Internet service providers, intends to expand FTD's online revenue-making opportunities, particularly because less than 5 percent of the floral industry's revenue comes from online, and the two companies have more than 50 million overlapping customers.[12] Expanded Marketing Opportunities and Efficiencies resulting from United Online's proven marketing expertise to attract consumers to FTD's websites and thousands of member florists while cross-selling FTD products to United Online's existing member base of over 50 million accounts that have similar demographic characteristics as FTD's customer base. "This transaction will meaningfully diversify our revenue base within a large global market experiencing significant migration to the Internet," commented Mark R. Goldston, Chairman, President and Chief Executive Officer of United Online.[6] After the closing of the acquisition, FTD will continue to operate as a wholly-owned subsidiary of United Online in Downers Grove and its international headquarters in the United Kingdom. United officials said in a statement that it was attracted to FTD to diversify its revenue streams and the chance to expand in the floral market. "This transaction will meaningfully diversify our revenue base within a large global market experiencing significant migration to the Internet," Mark R. Goldston, chief executive officer of United Online, said in a statement.[19]
United Online said it also has the option to replace the notes from the bid with additional cash. "This transaction will meaningfully diversify our revenue base within a large global market experiencing significant migration to the Internet," said United Online Chief Executive Mark R. Goldston.[9]
Sure the company will have $1.14 billion in revenue once FTD is added in, but the interplay between United Online's units is a bit fuzzy. [7] United's NetZero and Juno online businesses will account for less than 25 percent of all revenue under the deal. United is thinking of including FTD products in its MyPoints.com customer loyalty service, which the company acquired in 2006. FTD will continue to operate from its existing headquarters in Downers Grove, Illinois, as a wholly owned subsidiary of United.[4] Actually, dot-com mash-up synergies are part of United Online's stated reasoning, as seen in the conference call to discuss the deal with analysts. United touted its "proven marketing expertise to attract consumers to FTD's websites and thousands of member florists while cross-selling FTD products to United Online's existing member base of more than 50 million accounts that have similar demographic characteristics as FTD's customer base."[24] Our proven expertise in implementing marketing initiatives to drive results should enable us to leverage the FTD brand and bring FTD products to United Online's over 50 million consumer accounts.[6]
Separately, Internet service provider United Online (nasdaq: UNTD - news - people ) said it will purchase FTD as it looks to expand into the growing floral Internet business. [11] Let's play Pick the Punch Line. United Online (Nasdaq: UNTD ), best known for its discount Web access providers Juno and NetZero and the botched spinoff of its Classmates.com and loyalty shopping hub MyPoints, is buying floral delivery company FTD Group (NYSE: FTD ).[29]
As announced separately on April 30, 2008, United Online and FTD Group, Inc. have entered into a definitive agreement providing for the acquisition of FTD Group, Inc. by United Online, Inc. Additional details regarding the announcement and the investor Webcast are available within the " investors " section of United Online ' s Web site located at www.unitedonline.com ]] www.unitedonline.com.[27]
'We believe joining forces with United Online, an established Internet company with a proven operating track record and considerable acquisition expertise, will best serve the interests of our stockholders,' FTD CEO Michael Soenen said in a Wednesday statement.[3] "We believe joining forces with United Online, an established Internet company with a proven operating track record and considerable acquisition expertise, will best serve the interests of our stockholders," said FTD Chairman, President and Chief Executive Officer Michael J. Soenen.[6]
When the deal closes former FTD shareholders will own about 15 percent of United Online, which provides consumer Internet and media services.[18] United Online will have recurring cash flow (maybe it doesn't matter if strategically the FTD deal is misunderstood).[7]
With FTD on board, Juno and NetZero will now account for less than 25% of the overall revenue mix. That's really what this deal is all about, as cable and telco giants like Comcast (Nasdaq: CMCSA ) and AT&T; (NYSE: T ) have taken over the Web access market at the expense of the dial-up stars of the 1990s like United, AOL, and EarthLink (Nasdaq: ELNK ). The FTD deal may not come cheap, valued at $800 million, but it will add to earnings by this time next year.[29] United and FTD valued the total deal at approximately $800 million, which includes FTD debt and expenses.[18]
United says the total acquisition price is $800 million; the difference consists of the repayment of FTD indebtedness and expenses incurred in the transaction.[21]
The total purchase price amounts to $15.08 a share for FTD, an 11% premium on Tuesday's closing price.[20] United says the package of securities and cash is worth $15.08 based on the April 29 closing price of UNTD shares of $10.83.[21]
In total, holders will get $456 million, including $222 million in cash, 12.35 million shares and $100 million in notes.[21] Oh, and holders will have the option of taking $10.15 in cash and 0.4087 of a share of UNTD, and skipping the note, although the total value per share then drops to $14.58.[21]
Attractive Financial Characteristics, including anticipated earnings per share accretion on a GAAP basis beginning in the second quarter of 2009, stable and recurring cash flows and significant growth opportunities for the combined company.[6] On average, 7 analysts surveyed by First Call/Thomson Financial expected earnings of $1.77 per share.[14]
The company expects earnings between 18 and 19 cents per share, or between 30 and 31 cents excluding one-time items. This article is copyrighted by International Business Times.[9] The owner and operator of Internet service provider NetZero also said it expects profit of between 30 and 31 cents per share ' excluding one-time items. That's also ahead of analysts' predictions of 24 cents per share.[16] Analysts polled by Thomson Financial, on average, expect a profit of 24 cents per share.[28]
Shares of FTD Group added 81 cents, or 6 percent, to $14.31 in electronic premarket trading. [11] Shares in United Online were down 2.5 percent to $10.56 in early trading Wednesday.[16]
We had featured United Online in our "10 Stocks Under $10" weekly newsletter, and one issue of our "Special Situation Investing Newsletter" featured United Online as one of teh small cap Internet stocks that could actually be rolled up by a larger player.[13] NEW YORK (Associated Press) - Internet service provider United Online Inc. said Wednesday that preliminary first-quarter revenue beat its expectations.[28] United Online, Inc. (Nasdaq:UNTD) is a leading provider of consumer Internet and media services.[8] WOODLAND HILLS, Calif.--( BUSINESS WIRE )--United Online, Inc. (Nasdaq:UNTD), a leading provider of consumer Internet and media services, today announced preliminary financial results for its first quarter ended March 31, 2008 that exceed its previous financial guidance.[27]
FTD Group, Inc. is a leading provider of floral related products and services to consumers and retail florists, as well as other retail locations offering floral products, in the U.S., Canada, the U.K. and the Republic of Ireland. The business utilizes the highly recognized FTD and Interflora brands, both supported by the Mercury Man logo, which is displayed in approximately 45,000 floral shops worldwide.[6] FTD, the service that connects online and phone floral arrangement orders with local florists, will help diversify United's portfolio. Because FTD is simply passing on orders and providing other services for independent floral shops, it's a steady, high-margin cash cow. That is just what United needs as it grapples with its fading access business and the somber realization that Classmates missed the social networking boat. Classmates.com may have been early on the bandwagon of connecting people, but it squandered its lead by trying to become a premium service for college alums to rekindle old friendships instead of the more open-ended campus-friendly model that made Facebook -- and News Corp.' s (NYSE: NWS ) MySpace -- Web 2.0 sensations.[29] FTD is a company based in Downers Grove, Illinois, in the United States. It operates two main businesses: The Consumer Business sells flowers and gift items through its websites and The Floral Business sells computer services, software and even fresh cut flowers to FTD affiliated florists.[26]
According to the firm, after the acquisition, the dial-up business will represent less than 25% of the firm's total revenue. FTD is best known for its flower delivery services, which dispatches flower delivery orders to local florists. It also operates the Interflora brand.[10] The consumer businesses operate primarily through the www.ftd.com Web site in the U.S. and Canada and the www.interflora.co.uk Web site in the U.K. and are complemented by the florist businesses which provide products and services to the Company ' s independent members. These forward looking statements may include statements regarding the Company ' s outlook, anticipated revenue growth and profitability; anticipated benefits of its acquisition of Interflora Holdings Limited ( " Interflora U.K[1] " ), anticipated benefits of investments in new products, programs and offerings and opportunities and trends within both the domestic and international floral businesses, including opportunities to expand these businesses and capitalize on growth opportunities or increase penetration of service offerings. These factors, along with other potential risks and uncertainties, are discussed in the Company's reports and other documents filed with the Securities and Exchange Commission.[1]
United Online intends to file with the Securities and Exchange Commission (SEC) a Registration Statement on Form S-4, which will include a proxy statement/prospectus of FTD and United Online and other relevant materials in connection with the proposed transaction. The proxy statement/prospectus will be mailed to the stockholders of FTD. Investors and stockholders are urged to read the proxy statement/prospectus and Registration Statement, and any and all amendments or supplements thereto, when they become available because they will contain important information about the proposed transaction. [6] Investors and stockholders may also obtain a free copy of the proxy statement/prospectus and Registration Statement and the respective filings with the SEC directly from United Online by directing a request to Erik Randerson at (818) 287-3350 and directly from FTD by directing a request to Jandy Tomy at (630) 724-6984. Investors and stockholders are urged to read the proxy statement/prospectus and the other relevant materials when they become available before making any voting or investment decision with respect to the proposed transaction.[6]
Each of the company's directors and executive officers and other persons may be deemed, under SEC rules, to be participating in the solicitation of proxies in connection with the proposed transaction. Information regarding United Online's directors and officers can be found in its proxy statement filed with the SEC on April 29, 2008, and information regarding FTD's directors and officers can be found in its proxy statement filed with the SEC on October 11, 2007. Additional information regarding the participants in the proxy solicitation and a description of their direct and indirect interest in the transaction, by security holdings or otherwise, will be contained in the joint proxy statement/prospectus and other relevant materials to be filed with the SEC.[6]
Upon closing of the transaction, the former FTD stockholders will own approximately 15% of United Online.[14] United Online and FTD will host an investor conference call to discuss the proposed transaction today at 10:00 a.m. ET (7:00 a.m. PT).[6]
FTD Group Inc., a florist network and Web site operator being acquired by United Online Inc., said Wednesday its fiscal third-quarter profit dipped 6 percent, hurt by acquisition-related costs and other items.[11] United Online (NASDAQ: UNTD) is going to buy Florists Transworld Delivery or FTD to build up a conglomerate of Internet-service provider and a huge network of florists and floral-products supplier.[26] Woodland Hills' United Online is a provider of consumer Internet and media services.[25] Some ISPs decided to become hosting services providers while a few might have branched off into technology services. Whatever else one might say, United Online is quite unusual among sizable independent ISPs by successfully morphing itself into a portal, and largely leaving its ISP heritage behind.[22]
United Online may choose to increase the per-share cash consideration by $2.81 as a substitute for the senior secured debt. [15] For more information about United Online, please visit www.unitedonline.com. Any future determination as to payment of dividends will depend upon the financial condition, results of operations and cash flows of the company and such other factors as are deemed relevant by the Board of Directors.[8] For starters, United Online's core business is being an ISP: the company operates the Juno Online and Net Zero dial-up access brands.[21] Goldston continued, "As one of the premier branded marketing companies in the U.S., United Online anticipates being able to further enhance a world-class brand name, FTD, and build upon the fine work done by FTD's management team in creating a highly profitable business.[6] The addition of FTD to the United Online family will provide additional revenue streams'e-Commerce and Retail'in addition to the existing Communications and Classmates Media businesses.[14] "As a significant advertiser, United Online is the ideal partner to help FTD realize greater efficiencies in media spending and customer acquisition," FTD's CEO Michael J. Soenen said in a statement.[19] A live and archived audio Webcast of the conference call, along with a presentation containing additional information regarding the acquisition, will be available in the Investors section of United Online's website at www.irconnect.com/untd/ or the Investor Relations section of FTD's website at www.FTD.com ]] www.FTD.com.[6]
Investors and stockholders may obtain a free copy of the proxy statement/prospectus and Registration Statement (when available), as well as other documents filed by United Online and FTD with the SEC, at the SEC's website at www.sec.gov.[6]
We also look forward to welcoming the outstanding FTD employees to the United Online family."[6] After payments and disbursements have been made, FTD holders will still own approximately 15% of the combined United Online.[13]
To fund the deal, United has enlisted Wells Fargo, which is committing $375 million in term loans to FTD, and a $75 million revolving credit facility for working capital requirements of FTD. Existing 7.75% FTD senior notes will be retired. [21] The deal also includes $100 million in notes, $292 million in debt and $69 million in fees.[16]
Microsoft's online division has been particularly disappointing, and yet it is hoping to take over an Internet companyand putting around $40 billion on the line to do it. While such deals keep merger mavens busy and provide a little cocktail-party patter, investors seem puzzled.[24] United Online provides consumer Internet and media services through several brands, including Classmates, MyPoints, NetZero and Juno.[2] The company's services include online social networking (Classmates), online loyalty marketing (MyPoints), Internet access (NetZero, Juno) and email.[8]
Cummins said it would continue investing in opportunities round the world, while monitoring the U.S. economy closely and reiterated plans to invest between $550 and $600 million in capital expenditures globally. The company also affirmed its previous forecasts for revenues to grow by at least 12% from 2007 and that it expects to achieve its EBIT target of 10% of sales for the full year. [14] If there is analogy somewhere, consider Liberty Media (NSDQ: LINTA), which has combined communications, media and various transactional business. Even still, this is a surprising buy. Basically, the company is making a big move to dilute the impact of its declining ISP business. It now expects Q1 revenue of $121-$21.8 million, compared to a previous range of $116-$120 million.[23]
The jury still is out about how well AOL will make the transition from subscription access provider to ad-supported portal. It's a tough decision to abandon a business spinning off more than $1 billion in revenue every year, hoping to create a new ad-supported model.[22] Revenues increased to $1.01 billion from $809.8 million for the year ago quarter.[14] Revenue is expected at about $192 million, which would be a 5 percent increase from $182.9 million in the prior year.[11]
Adjusted EBITDA, which excluded other income/expense, net, was $26 million for the same period of the prior fiscal year. A table reconciling net income to EBITDA and Adjusted EBITDA and management ' s discussion of the use of non-GAAP measures is attached to this release.[1] The Company believes EBITDA and Adjusted EBITDA facilitate operating performance comparisons from period to period and company to company by backing out potential differences caused by variations in capital structure (affecting relative interest expense), tax positions (such as the impact on periods or companies of changes in effective tax rates or net operating losses), the age and book depreciation of facilities and equipment (affecting relative depreciation expense), other (income) expense, net (including foreign currency transactions) and other expenses or income items that are not considered reflective of the Company's core operations. The Company also presents EBITDA and Adjusted EBITDA because it believes they are frequently used by investors and other interested parties in the evaluation of high yield issuers, many of which present EBITDA and/or Adjusted EBITDA when reporting their results.[1] EBITDA and Adjusted EBITDA have limitations as analytical tools, and should not be considered in isolation, or as a substitute for analysis of the Company's results as reported under GAAP. Some of the limitations of EBITDA and Adjusted EBITDA are that they do not reflect the Company's cash expenditures for capital expenditures, they do not reflect the significant interest expense or the cash requirements necessary to service interest or principal payments on the Company's debt, they do not reflect changes in, or cash requirements for, the Company's working capital requirements, they do not reflect other expenses or gains excluded above and other companies in the Company's industry may calculate these measures differently than presented above. The Company compensates for these limitations by relying primarily on GAAP results and using EBITDA and Adjusted EBITDA only supplementally.[1]
The Company defines Adjusted EBITDA as EBITDA plus expenses and minus income items that are not considered reflective of the Company's core operations.[1]
Adjusted EBITDA, which excludes the expenses described above, is expected to be approximately $26 million.[1] Targeted EBITDA includes approximately $4 million of expense related to stock compensation associated with SFAS No. 123(R) and a deferred compensation plan related to Interflora.[1] Including the expenses described above, earnings before interest, taxes, depreciation and amortization (EBITDA), is expected to be approximately $22 million for the third quarter of fiscal year 2008.[1]
The company announced Wednesday that it will acquire FTD for $800 million ( Techmeme ). [7] Estimates typically exclude one-time items. FTD said it expects to maintain its fiscal full-year sales forecast of about $645 million when it reports its financial results on May 6.[11] Wall Street is expecting $119 million 'according to a poll conducted by Thomson Financial.[16]
Adjusted OIBDA (1) is expected to be in the range of $38.1 million to $38.7 million, versus previous guidance of between $30.0 million to $34.0 million.[27] Op income guidance is way higher, at $19.9-$20.5 million from $11.8-$15.8 million.[23]
Of that $15.08, $3.31 will be the principal amount of 13% senior secured notes due in five years.[29] HP Researchers Build Intelligent Memory Researchers at Hewlett-Packard have developed a working unit of a memory circuit that has existed in theory for 37 years. United Online to Say It With Flowers Take note, Microsoft: There may be better ways to diversify your business than by wooing Web 2.0 companies such as Yahoo.[4] The acquisition will reduce United's online access business to less than 25% of total revenue.[20] United is just doing what dying companies should do. leverage cash flow to buy something real. likewise, should they find a way to cross market they could do well. or if this is the first of many to-come acquisitions they may be use the cash flow to acquire communities and online vendors to those communities. maybe they buy the knot as well.[20]
Investment firms holding about 32 percent of FTD shares have agreed to the acquisition.[4] The Company presents Adjusted EBITDA because it considers it an important supplemental measure of performance, as it is used as a performance measure under the senior credit facility entered into in connection with the acquisition of Interflora Holdings Limited, the indenture governing the Notes and the Company's executive compensation plan.[1] Measures similar to EBITDA and Adjusted EBITDA are also widely used by the Company and by others in the Company's industry to evaluate and price potential acquisition candidates.[1]
The adjustment made in the calculation of Adjusted EBITDA, as described above, is an adjustment that would be made in calculating the Company's performance for purposes of coverage ratios under the senior credit facility and the indenture governing the Notes, and the Company's executive compensation plan bases incentive compensation payments in significant part on the Company's performance measured using Adjusted EBITDA as presented above.[1]
The company ' s definition of adjusted OIBDA has been modified from time to time. Management believes that because adjusted OIBDA excludes (1) certain non-cash expenses (such as depreciation, amortization, stock-based compensation, and impairment of goodwill, intangible assets and long-lived assets); and (2) expenses that are not reflective of the company's core operating results over time (such as restructuring and related charges), this measure provides investors with additional useful information to measure the company's financial performance, particularly with respect to changes in performance from period to period. [27] The table below reconciles the company's preliminary financial results and prior guidance for operating income, a GAAP measure, to adjusted OIBDA (1).[27]
Information about potential factors that could affect the company's business, financial condition, results of operations, and cash flows is included in the company's annual and quarterly reports filed with the Securities and Exchange Commission ( http://www.sec.gov ), including, without limitation, information under the captions "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Risk Factors."[8] The press release containing the third quarter financial results will be available on the Company ' s Web site, www.ftd.com ]] www.ftd.com, under the Investor Relations section.[1]
Excluding the impact of synthetic fuel investments, Southern Company earned 47 cents a share for the first quarter of 2008, compared to 41 cents a share for the same period in 2007.[14]
FTD Group will continue to run as a United subsidiary. United also said it plans to cut its regularly quarterly dividend by 10 cents to 10 cents after the deal is complete. [18] The deal is expected to close by the end of September 2008, pending the approval of FTD stockholders.[4]
Upon closing of the deal, United is decreasing its regular cash dividend from $0.20 to $0.10.[20] United said it has the option to not include the notes in the deal, instead raising the per-share amount by $2.81.[18]
Revenue for the first two quarters increased to $1.75 billion from $1.43 billion for the same period last year. [14] Net sales rose 23% to $3.47 billion from $2.82 billion last year, with international markets accounting for 57% of total sales.[14] The Company is not projecting any additional other (income) expense, net or other items not reflective of ongoing operations for the fiscal year ending June 30, 2008.[1] The Company defines EBITDA as net income before net interest expense, income tax expense, depreciation and amortization.[1]
The remaining purchase price consists of repayment of FTD indebtedness and expenses incurred in connection with the transaction. [14] In connection with the transaction, FTD's 7.75% senior subordinated notes either will be defeased at closing or retired pursuant to a tender offer and consent solicitation.[6] United said it will fund the transaction with available cash, notes and stock as well as term loans and a revolving credit agreement.[18]
United Online has obtained a commitment from Wells Fargo Bank, National Association, to provide a portion of the financing for the transaction.[6] Expansion into an Attractive Market Segment by enabling United Online to participate in a large domestic and international floral market that is experiencing significant growth in the Internet sector.[6] For more information about United Online, please visit www.unitedonline.com. These statements include, without limitation, expectations regarding future: financial performance; depreciation and amortization; stock-based compensation; and restructuring and related charges.[27] J.P. Morgan Securities Inc. acted as financial advisor and Skadden, Arps, Slate, Meagher & Flom LLP acted as legal advisor to United Online.[6]
United also owns social network Classmates.com. We don't know what the folks at United know about the flower business, but CEO Mark Goldston has a background in retail (apparel, cosmetics) and says he'll be able to market FTD products to United's user base of 50 million accounts. [20] Formerly known as Mercury Man Holdings Corporation, FTD sells floral and specialty gift products to consumers and retail florists, as well as other retailers throughout the United States, Canada, the United Kingdom and the Republic of Ireland.[2] After spending many years marketing major retail brands in the fragrance, cosmetic and other image product industries and managing consumer retail businesses, I am especially looking forward to working with the thousands of FTD affiliated florists and the potential for developing specific programs designed to further invigorate the FTD florist channel and increase the number of orders delivered to that trade channel."[6] We will explore opportunities to encourage repeat purchases of FTD products using reward programs based on our MyPoints loyalty marketing service.[6]
SOURCES
1. FTD Group, Inc. Announces Preliminary Results for Third Quarter Fiscal Year 2008
2. NetZero, Juno Operator Acquires Major Floral Products Supplier
3. MidwestBusiness.com: Midwest Business & Technology News
4. PC World - Business Center: United Online to Say It With Flowers
5. Free Preview - WSJ.com
6. United Online, Inc. to Acquire FTD Group, Inc. for Approximately $800 Million
7. Bizarre merger of the day: United Online buys FTD Group | Between the Lines | ZDNet.com
8. United Online Declares Quarterly Dividend of $0.20 Per Share
9. United Online to Acquire FTD Group for $800 Mln - International Business Times -
10. United Online Buys FTD | socalTECH.com
11. FTD Group 3Q profit slips on acquisition-related costs - Forbes.com
12. FTD sold for $456 million plus :: CHICAGO SUN-TIMES :: Business
13. 24/7 Wall St.: United & FTD In Odd Merger (UNTD, FTD)
14. RTTNews - Quick facts Articles, Positive EPS Surprises, News Analysis, Earnings, Audio News.
15. United Online to buy FTD Group in a deal valued at up to $800m | Latest News | News | Hemscott
16. Los Angeles Business Journal Online - business news and information for Los Angeles California
17. United Online to buy FTD Group for $800 mln | Deals | Reuters
18. United Online to purchase FTD Group
19. Daily Herald | FTD sold for $800 million
20. United Online To Buy FTD Group For $800M - Silicon Alley Insider
21. Tech Trader Daily - Barron's Online : United Online To Buy FTD Group; Ups Q1 Forecast
22. United Online: Not an ISP Anymore
23. United Online To Acquire Floral Company FTD For $800 Million; Guides Up For Q1 - washingtonpost.com
24. Deal Journal - WSJ.com : Companies Are Proposing Mergers Again. Be Afraid.
25. United Online buying FTD Group in $800M deal - Los Angeles Business from bizjournals:
26. United Online acquires FTD Group - Pravda.Ru
27. United Online Announces Preliminary Financial Results for Q1 2008
28. United Online projects 1Q earnings above expectations
29. Flowers for Your Classmates
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