In a blending of online and offline strengths, Blackhawk Network Inc. has acquired CashStar Inc. for approximately $175 million in cash.

The acquisition, announced Wednesday, significantly strengthens Blackhawk’s presence in the digital gifting business.

CashStar’s edge in the emerging digital gift card market — the fastest-growing segment of the estimated $100 billion gift card industry in the U.S. — provides Blackhawk with greater holistic reach across digital and physical channels. Blackhawk has traditionally been more active in the physical card realm, particularly in the grocery store sector, where it originally began as a subsidiary of Safeway in 2001.

“The acquisition strategically enhances Blackhawk’s ability to provide the right digital solutions to our partners to meet the changing needs of business customers and consumers,” Talbott Roche, CEO and president of Blackhawk Network, said in a press release. “With the addition of CashStar, Blackhawk is now a leading provider in the fast growing first-party digital market.”

The acquisition marks a significant consolidation of the gift card market in the U.S., with InComm Inc. and First Data Corp. representing the other two major players in the sector.

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Nick Holland

Nick Holland

Nick Holland is a Senior Analyst at PaymentsSource. He has previously held analyst roles at Javelin Strategy & Research, Yankee Group and Aite Group.