Starboard takes stake in Green Dot and might push for tie-up

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Activist investor Starboard Value has built a position in Green Dot Corp. and may push for changes including a potential merger at the prepaid debit card company.

The New York-based hedge fund, which disclosed a 9.3% stake in Green Dot on Monday, said in a regulatory filing that it may also push for operational changes to improve its performance. The company has a market value of $1.64 billion after its shares have fallen 58% in the past year. It’s searching for a new chief executive officer after its co-founder, Steve Streit, stepped down in December.

“Green Dot’s board of directors welcomes transparent, constructive feedback regarding the common goal of enhancing long-term shareholder value,” the Pasadena, California-based firm said in a statement. “The company appreciates all shareholder relationships, and will remain focused on executing its business strategy and maximizing value for all shareholders.”

A representative for Starboard didn’t immediately respond to a request for comment.

Starboard has a history of trying to influence companies on the executives they hire. It said it also may have discussions with the board and management about the company’s board composition and corporate structure.

Green Dot is unusual for financial technology companies, partly because it owns a bank subsidiary, which allows it to provide banking services for its prepaid debit cards without relying on a sponsor bank. Starboard said it also may push the company to sell assets.

Some of Green Dot’s competitors have been consolidating. In 2013, rival NetSpend Holdings Inc. was acquired by Total System Services Inc. for about $1.2 billion. Total Systems was subsequently sold to Global Payments Inc. in a $23.4 billion deal last year.

In December, Green Dot announced Streit and fellow co-founder and Chief Financial Officer Mark Shifke were stepping down and that Chairman Bill Jacobs would serve as interim CEO.

It’s the second time a Green Dot shareholder has pushed the company for changes. In 2016, Harvest Capital won two boards seats in a proxy fight in which Streit narrowly kept his seat.

Bloomberg News
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