Calif. rival to buy Authorize.Net for $565m

The electronic payments company Authorize.Net Holdings Inc. will be acquired by a California competitor, CyberSource Corp., in a $565 million deal that will result in the closing of Authorize.Net's headquarters in Marlborough and the loss of a dozen jobs.

Known as Lightbridge Inc. until April, Authorize.Net provides Internet credit card processing services to small and mid-size online businesses. CyberSource provides similar services to large companies.

CyberSource chief executive Bill McKiernan said the complementary business models of the two companies make them ideal partners. "This is an investment in growth and scale," McKiernan said. "The combination gives us full coverage of the industry, from top to bottom."

Timothy O'Brien, chief financial officer of Authorize.Net, said that his company's revenues have been growing at more than 20 percent annually, but that the merged company could grow even faster. "We think the fit between the two companies is extremely attractive," he said.

Authorize.Net's presence in Massachusetts is one of the casualties of the deal. While the company is based here , its main operations are in American Fork, Utah, and in Bellevue., Wash. All 12 of the jobs in Marlborough will be eliminated, but no cuts will be made in Utah or Washington.

Aaron McPherson, an electronic payments analyst at IDC Corp. in Framingham, said he sees a trend toward fewer and bigger payment-processing companies. "The margins on electronic payments is very, very low, so there's a high value on economies of scale," McPherson said.

Also, he said, CyberSource and other payment firms hope to expand into previously neglected markets. While the world's largest companies often buy supplies and pay bills electronically, many small and medium-size companies still rely on paper invoices and checks.

"There are a lot of payments that are paper-based that are going to be going electronic in a few years," said McPherson, and companies like CyberSource will be well placed to provide payment services.

Authorize.Net shareholders will receive 1.1611 shares of CyberSource stock for each share of Authorize.net stock. In addition, CyberSource will pay $125 million in cash, to be divided among shareholders at about $4.25 per share.

The deal's estimated $565 million value is based on the value of CyberSource stock as of Friday's market close.

CyberSource stock lost 69 cents to close at $12.21, while Authorize.Net climbed $1.30 to $18.03, both on the Nasdaq stock exchange.

Hiawatha Bray can be reached at bray@globe.com.