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CheckFree in e-billing buy
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April 27, 2000: 2:05 p.m. ET
Electronic payment firm acquires Bank of America's online billing assets
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NEW YORK (CNNfn) - CheckFree Holdings Corp. on Thursday acquired Bank of America's electronic billing and payment assets in exchange for CheckFree shares, giving the largest U.S. bank a minority stake in CheckFree, an electronic financial services and software provider.
The agreement boosts CheckFree's customer base by nearly 10 percent to about 3.6 million subscribers and instantly gives the company responsibility for more than $10 billion a year in electronic transactions.
In exchange for access to Bank of America's 2.1 million online customers for at least the next 10 years, CheckFree agreed to give the Charlotte, NC-based bank, the No. 1 U.S. bank in terms of assets, 10 million restricted shares of its common stock and 10 million performance-based warrants for its stock -- giving the deal a total equity value of $395.6 million based on CheckFree's closing price of 35-9/16 Wednesday.
The warrants are exercisable only if the number of Bank of America customers using CheckFree's services exceed 10 million over the next 10 years.
 CheckFree (CKFR: Research, Estimates) shares surged on word of the deal, climbing 10-7/16, or 26 percent, to 50 just after midday. Bank of America (BAC: Research, Estimates) slumped with a majority of other financial stocks Thursday, retreating 1-3/8 to 50-3/8 during the same period.
The deal instantly provides CheckFree access to 700,000 Bank of America customers currently using online payment services, and offers enormous potential for future growth, given that the bank's current customer base already exceeds 30 million households.
"This is an extremely significant milestone toward accelerating consumer adoption," said Pete Knight, CheckFree's chairman and chief executive officer.
It also comes just months before the Atlanta-based company expects to close on its $1 billion acquisition of its top competitor TransPoint LLC. As part of that deal, CheckFree agreed to distribute a 23 percent stake in its company to TransPoint's partners Citigroup Inc. (C: Research, Estimates), Microsoft Corp. (MSFT: Research, Estimates) and First Data Corp. (FDC: Research, Estimates).
TransPoint will significantly increase the number of companies using CheckFree products to handle online billing and payment. Currently, 121 billers already use CheckFree's services, including a handful of other top banks, including Bank One Corp. (ONE: Research, Estimates) and First Union Corp. (FTU: Research, Estimates). 
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