Reminiscent of dot-com buyouts of another era, Timonium-based Bill Me Later agreed yesterday to be sold to auction giant eBay for $945 million - amply rewarding its founders, investors and 300 employees for building the technology start-up into a major online payment provider in only eight years.
Bill Me Later is a smaller but significant rival to eBay's online purchasing system, PayPal. To buy its competitor, eBay will pay $820 million in cash to acquire the company's capital stock and warrants plus $125 million to assume Bill Me Later's outstanding employee stock options. The deal is expected to close by the end of the year.
"It's been an incredible ride," said Mark Lavelle, vice president of corporate development and strategic planning, and one of Bill Me Later's founders. "We had a dream of inventing a new payment method for helping customers and merchants. ... It makes us realize the dream to play on a global scale, impacting the largest and best player."
Bill Me Later's management, including Chief Executive Officer Gary Marino, will continue to run the company, which will become a business unit of PayPal. Its work force will remain intact, and the company's expansion plans in Hunt Valley and San Francisco will continue, Lavelle said.
Bill Me Later allows customers to pay later for items purchased at more than 1,000 online retailers, including Amazon.com and Walmart.com, without entering credit card information. Instead, the customer fills in his or her birth date and the last four digits of the Social Security number.
The company uses its proprietary underwriting system to approve each transaction, which takes about three seconds. It picks up the tab and is repaid by the shopper. If customers carry a balance at Bill Me Later, they incur interest charges.
"Bill Me Later is a fabulous business, but the opportunity that Bill Me Later and PayPal have together is nothing short of tremendous," Marino said yesterday in a conference call with analysts.
Ebay expects Bill Me Later to generate about $150 million in revenue next year. The company had about $90 million in sales last year and estimates $130 million this year.
John Donahoe, eBay's president and chief executive, characterized Bill Me Later as a "natural extension" to the auctioneer's businesses and a complement to PayPal, the industry's No. 1 online payment provider.
