They say the second time is a charm. Mountain View, Calif.-based Intuit and Electronic Clearing House (ECHO) certainly hope the adage is true. On December 19, Intuit and ECHO signed a definitive agreement for Intuit to acquire ECHO. Intuit previously agreed to acquire ECHO in December 2006, but the parties mutually terminated the arrangement in March.
Intuit provides business and financial management solutions for small and midsize businesses, financial institutions, consumers, and accounting professionals. The company's financial institutions division, anchored by Digital Insight, provides on-demand banking services to help banks and credit unions serve businesses and consumers. ECHO, based in Camarillo, Calif., provides electronic payment processing solutions, including check, debit card and credit card processing; as well as check verification, collection and guarantee services; and automated clearing house capabilities (ACH).
According to Intuit, ECHO's ACH capabilities will round out Intuit's payment offerings with check services. Intuit now will be able to offer solutions to merchants that address the most common payment methods, including credit card, debit card, ACH, gift card, check verification, collection, guarantee and conversion, the company said in a release. The combined offerings will be designed to save merchants time and money and will differentiate Intuit's solutions from other electronic payment providers, the vendor added.
"We expect ECHO's technology and operational assets will help us accelerate Intuit's growth and strengthen our expanding small business ecosystem that includes the fast-growing payments space," said Brad Smith, SVP and general manager of Intuit's small business group, in the release.
Back to the Drawing Board
At the time of the original deal in 2006, ECHO revealed that it had been cooperating as a witness in a federal investigation relating to its Internet wallet customers that provided services to online gaming Web sites. The government did not pursue any action against the company, but ECHO agreed to disgorge $2.3 million, which represented management's estimate of the company's profits from processing and collection services provided to its Internet wallet customers since 2001.
ECHO stopped processing and collection services for Internet wallet customers in early 2006 and has addressed governmental concerns, according to the company.
"[We] believe today, as we did before, that ECHO is the best strategic fit for Intuit to provide automated clearing house capabilities," says Diane Carlini, Intuit senior manager. The transaction, valued at approximately $131 million, is expected to close in the first quarter of 2008, subject to regulatory review and ECHO shareholder approval.
According to Carlini, customers won't immediately be affected by the deal. "It's business as usual for both ECHO and Intuit," she says. "Once the transaction closes and we begin integration planning, both teams will discuss customer programs and opportunities for growth."