Intuit Continues Diversification Strategy (INTU, ECHO)

Intuit Inc. (NASDAQ:INTU) is continuing to diversify away from being a tax and "Quickbooks" company.  It has signed a new agreement to acquire Electronic Clearing House Inc. (NASDAQ:ECHO) for $17.00 per share in cash.  The total purchase price is approximately $131 million on a fully diluted basis. 

Electronic Clearing House is a provider of e-payment processing solutions for checks, debit cards, credit card processing, check verification, collection, and guarantee services and automated clearing house capabilities.

This isn’t the first dance for these two.  Intuit had previously signed a definitive agreement to acquire ECHO in December 2006, but the parties mutually terminated the arrangement in March 2007.

Shares were halted shortly after the announcement. ECHO closed the day up 2% at $7.90 and the 52-week range is $7.70 to $18.73.  At $17.00, this is greater than a 100% premium acquisition.  Intuit’s market cap is $10 Billion, so the size or price of this is irrelevant for all practical purposes.

We noted with its last earnings how the company’s diversification away from tax prep was a boost, and this is one more incremental move in that direction.

Jon C. Ogg
December 19, 2007

Jon Ogg can be reached at [email protected]; he produces the SPECIAL SITUATION INVESTING NEWSLETTER covering buyouts, merger-arb, spin-offs, and more.  He does not own securities in the companies he covers.