The government is scrutinizing the Stamps.com deal to acquire Endicia, but Stamps said it expects the deal to go through this year. It also revealed that if the deal does not gain antitrust regulatory approval, Stamps must pay Endicia’s parent company Newell $10.75 million.
Both companies are USPS PC Postage providers that offer solutions to shippers and mailers, including online merchants. Stamps announced in March that it had entered into a definitive agreement to acquire Endicia for $215 million in cash.
When it announced the proposed acquisition, Stamps.com explained that the sale was subject to the Hart-Scott-Rodino Act, which gives the Justice Department 30 days to evaluate acquisitions and decide whether to investigate further possible antitrust implications.
In a filing with the SEC in June, and again in announcing its recent quarterly earnings, Stamps.com revealed it had received a “second request” from the US Department of Justice in connection with its acquisition of Endicia (which also received the DOJ request). “This second request from the DOJ is a standard part of the full regulatory process,” according to Stamps.
Analysts had the opportunity to ask the company about the progress of the acquisition last week in a post-earnings conference call. Stamps.com CEO Ken McBride said he continued to expect the transaction to close in 2015.
Asked if he knew what areas, if any, the DOJ wanted to look more into, McBride said, “The second request is really a standard part of the full regulatory review process. And we’re in the process of complying with second request and providing the information for their review. I would say it’s a very comprehensive review and there’s really no indication as to what specific area they’re focused on. As the process unfolds, we potentially get that insight. But at this point, it’s very early in the process. And so it’s not really anything we could answer with any certainty.”
And he said it was largely what they had expected and “largely marching along the timeframe that we had predicted.”
Also revealed in the company’s quarterly filing were details about each party’s rights to terminate the Stock Purchase Agreement
In May, EcommerceBytes took a closer look at how the acquisition could impact shippers and industry players and spoke to an antitrust expert to learn what the government looks at when conducting pre-merger reviews.