EBay Buys VeriSign Unit for $370 Million

SAN FRANCISCO — Online marketing giant eBay and domain registrar VeriSign announced a strategic alliance Monday that will include eBay’s purchase of VeriSign’s payment processing business.

PayPal, the online payment company eBay bought in 2002 for roughly $1.5 billion, will incorporate VeriSign’s technology into its merchant services, including VeriSign’s password protection technology that is designed to thwart identity theft.

EBay, via PayPal, is expected to shell out $370 million in cash and stock options as part of the deal.

“VeriSign's payment gateway is a market-proven product that perfectly complements PayPal's existing payment services,” Jeff Jordan, president of PayPal, said of the deal. “This acquisition allows PayPal to give customers more choice in payment services.”

VeriSign saw an initial 5.2 percent jump in its stock price following the news, but finished the day only about half-a-percent higher at $20.04. Ebay ended the day up 1.4 percent at $40.46.

Officials at PayPal said they hoped the purchase would expand PayPal’s presence in the merchant services market, a space VeriSign has long dominated. VeriSign’s payment gateway gives merchants several processing and authorization tools that PayPal officials expect to bring an additional $100 million in revenue to the company in the first year alone.

PayPal currently processes around $40 billion in online payments a year.

“The acquisition provides our worldwide merchant base with the benefits of PayPal's already robust payment capabilities,” Stratton Sclavos, chairman and CEO of VeriSign, said.

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