October 12, 2005 — (WEB HOST INDUSTRY REVIEW) — Ebay’s (ebay.com) payment service PayPal (paypal.com) announced on Monday that it had acquired VeriSign’s (verisign.com) payment gateway business, with the two companies agreeing to form an alliance for e-commerce and online security.
PayPal will combine the acquired business with its merchant services platform and deploy a suite of VeriSign security services designed to protect and enable online transactions. Two-factor authentication, slated for 2006, is a part of the deal.
“VeriSign’s payment gateway is a popular and market-proven product that perfectly complements PayPal’s existing payment services,” says Jeff Jordan, president of PayPal. “We’re very excited about the opportunity to extend the benefits of PayPal’s services to the VeriSign customer base. This acquisition allows PayPal to give our customers more choice in payment services and grow our merchant services business even more quickly.”
PayPal paid approximately $370 million in cash and eBay stock for the VeriSign assets. The company says the new business will generate an incremental $100 million of revenue at a 20 percent pro forma operating margin in 2006.
