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Dow Jones Business News
ECollege.com to Acquire Datamark for $72 Million
Tuesday September 16, 8:28 am ET
DENVER (Dow Jones)--eCollege.com agreed to acquire Datamark Inc., a Salt Lake City-based provider of enrollment marketing services, for about $72 million in cash, notes and stock.
In a press release Tuesday, the provider of online post-secondary education services said it expects the deal will be "mildly accretive" to earnings and will more than double revenue and EBITDA in 2004.
Jonathan Newcomb, a
principal of Leeds Weld &
Co., will serve on the
eCollege board. The New
York-based private equity
firm leads the group of
investors selling Datamark.
Newcomb's addition to the
eCollege board boosts
membership to seven
directors, a company
spokeswoman said.
Wall Street currently expects eCollege to post earnings of 6 cents a share on revenue of $29.5 million in 2003, according to mean estimates compiled by Thomson First Call (News - Websites). For 2004, the consensus estimates are 26 cents and $38.1 million, respectively.
In 2002, eCollege reported revenue of $23.7 million and a loss of $4.9 million, or 30 cents a share. The loss before interest taxes depreciation and amortization was $251,000.
Datamark had revenue of $32.5 million, net income of $2.2 million and EBITDA of $5.3 million in 2002, eCollege said.
ECollege expects to close the acquisition within 60 days. It plans to leave Datamark's corporate headquarters in Salt Lake City and manage the marketing company as a separate operating division. No job eliminations are expected as a result of the acquisition.
The $72 million eCollege is paying for Datamark consists of $58 million cash, $12 million of subordinated notes payable to the sellers, and 150,000 common shares of eCollege. Based on Friday's closing price of $14.90, the shares are worth about $2.2 million. The stock closed Monday at $14.68.
ECollege is funding the $58 million with cash on hand and $20 million to $30 million of long-term debt. As of June 30, the company had about $15.3 million in cash and cash equivalents. Total liabilities stood at $12.5 million, including about $1.6 million in long-term liabilities.
"Our customers' No. 1 request is that we add enrollment services to our product mix -- now we'll be able to honor that request," said Chairman and Chief Executive Oakleigh Thorne in a written statement. "In doing so, we should be able to drive more sales and earnings for Datamark, as well as drive more enrollment fee revenue for eCollege."
