Care Concepts I to Buy IBill in All-Stock Deal

Rhett Pardon
DEERFIELD BEACH Beach, Fla. — Care Concepts I Inc. agreed to acquire Media Billing LLC and Internet Billing Co., collectively known as iBill, from Penthouse International for $55 million in an all-stock deal.

Care Concepts, a media and marketing holding company, said Friday the deal with the online adult processor will provide added flexibility and synergy to Care Concept's auction operations.

Care Concepts will pay Penthouse International about $55 million in series D convertible preferred stock and 3.89 million common shares.

As a result of the transaction, Penthouse will initially own 19.9 percent of Care Concepts.

“Similar to the combination of PayPal and eBay, the acquisition of iBill provides our auction operations with an exciting strategic solution to vertically integrate online payment services into an auction environment," Gary Spaniak, Jr., Care Concept's president, told XBiz.

Spaniak said that the day-to-day operations of Deerfield Beach, Fla.-based iBill will be continued by its current management.

New York-based Care Concepts owns Foster Sports Inc., a sports-oriented multimedia company that produces sports radio talk shows, and, a website which showcases products and services in an auction format starting with an opening bid of about 30 percent of the retail value.

The deal is subject to standard closing conditions as well as the approval of the American Stock Exchange, which has preliminarily advised Care Concepts that to maintain its listing on the exchange, it will be required to satisfy criteria for an initial listing giving effect to the acquisition.

With the announcement, XBiz learned that the company will announce at InterNext an expansion of its products to help online-adult companies.

“We are going to revamp our commerce management interface, and update our web-share service in a consolidated fashion,” iBill spokeswoman Cathy Beardsley told XBiz. “We also are going to announce our new web-phone service with recurring billing.”

Beardsley said that 78 percent of iBill’s revenues are from adult entertainment content. In 2003, iBill averaged 1.2 million transactions per month and completed approximately $330 million in gross transactions.

IBill was acquired by Penthouse in March from Norcross, Ga.-based InterCept Inc. through its Media Billing LLC division, which purchased the company with $700,000 in cash, $800,000 in a short-term loan and the assumption of $22 million in debt.

Two months ago, iBill said the Justice Department is investigating the company in an antitrust probe along with two other large adult processors.

The probe is seeking to determine whether the two competing online adult payment providers, as well as iBill, collaborated to set fees and if so, whether practices are anti-competitive.

Beardsley said that the 8-year-old company recently has focused on various growing Internet content categories such as online subscriptions, music, dating and video games and is implementing an expansion into categories like online travel and online auctions.

“The full stock market listing [on the AMEX] enhances iBill's business strategy by offering greater access to the capital markets as we continue to grow with our clients," Beardsley said.