Stamps.com Agrees To Go Private In $6.6 Billion All-Cash Deal

Stamps.com Inc. STMP received an offer it couldn't refuse. And it didn't.

The El Segundo, California-based provider of e-commerce shipping and mailing software said Friday it agreed to be taken private by Thoma Bravo, a San Francisco-based private equity firm specializing in software investments, for $6.6 billion in cash, or $330 a share. The news, which broke early in the day, sent Stamps' share price soaring as soon as the markets opened. As of 3 p.m. EDT Friday, Stamps' shares were up more than $126 a share to $324.00, a nearly 64% gain from Thursday's close.

The transaction is expected to close during the third quarter, barring a competing offer, which is possible under terms of the agreement. Stamps' board and advisers have until Aug. 18 to solicit competing bids, and can terminate the Bravo deal if they find a superior proposal, the two companies said in a statement. 

Bravo owns 51 companies in the IT space, according to its website. Perhaps its two most well-known brands are J.D. Power, a vehicle quality rating and marketing firm, and McAfee, a forerunner in web security software. Bravo has about $78 billion in assets under portfolio management.

Ken McBride, Stamps' chairman and CEO, said in the statement that access to Bravo's capital will help it "capture the expanding e-commerce shipping market and extend our position as the leading global multi-carrier e-commerce shipping company." In 2020, a year of unprecedented e-commerce growth, Stamps customers used its various software products to ship 3.5 billion packages worldwide valued at more than $19 billion, the company said in a May presentation.

Of that, $8 billion was shipped domestically and internationally through the U.S. Postal Service, Stamps' charter customer and still its largest. About $5 billion was shipped domestically through other carriers in the U.S., with the balance largely going internationally but outside the Postal Service network, Stamps said.

Founded in 1996 as an online printing and labeling service that provided an option to postage meters, stamps and trips to the local post office, Stamps hit its first big milestone three years later, when it became the first Postal Service-approved company to offer a software-only service allowing customers to buy and print postage online. Among its many relationships is a negotiated service agreement with UPS Inc. UPS in which Stamps offers price discounts to shippers of UPS' ground and second-day air delivery rates.

Stamps got in on e-commerce's ground floor and has over the past quarter century broadened its product and geographic reach to accommodate surging demand for online shopping and shipping. It has acquired parcel delivery-centric technology firms like Shipping Easy, ShipStation and Endicia, among others. Today, Stamps has seven units, including its flagship business that bears the corporate name.

Stamps and the Postal Service had an exclusive parcel reseller relationship until February 2019, when Stamps ended the part of the alliance covering two of its units — the flagship Stamps.com. business and Endicia, with label-printing software that was used by high-volume users — because the Postal Service wouldn't allow Stamps to incorporate other parcel carriers onto its platform. 

The impending loss of the postal business hit Stamps hard in the short run, with shares falling $115 a share to $83 a share on the day the breakup was made public. However, the move was seen at the time as a long-term boon to Stamps because it could make its services available to a wider universe of users. 

Shares have been on a powerful ascent for more than two years, culminating with Friday's massive surge following the announcement of the Bravo acquisition.

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