TSYS, a global payment solutions provider, will acquire NetSpend, a provider of general purpose reloadable prepaid debit cards and related financial services to underbanked U.S. consumers, in an all cash transaction valued at approximately $1.4 billion.
The transaction is expected to close in mid-2013, subject to regulatory approvals, approval by NetSpend shareholders and customary closing conditions. Under terms of the deal, NetSpend shareholders will receive $16 in cash for each share of NetSpend common stock.
NetSpend’s distribution network provides consumers the ability to purchase prepaid debit cards at more than 62,000 distributing merchant locations, such as retailers, check cashers, convenience stores, grocers, insurance providers and tax preparers. It is also a provider of corporate payroll card solutions, and has a direct distribution channel to reach consumers through online, mobile and direct marketing sources.
NetSpend currently serves more than 2.4 million accounts — 46% of which are direct deposit accounts — with more than 500 retail distributors and more than 130,000 reload locations.
“The NetSpend acquisition is truly a transformational event for TSYS and consumers alike. It enables us to meet our strategic goals of diversifying our business, being a more innovative payment solutions provider and expanding our role within an area of payments that is expected to grow at a 20% annual rate over the next four years. The acquisition also complements our already strong presence in the prepaid processing space,” said Philip W. Tomlinson, chairman of the board and CEO at TSYS.
Dan Henry, CEO of NetSpend, will join the TSYS executive team.
“With the strength and resources of TSYS, our opportunities are endless,” he said. “We bring a meaningful, fast-growing business to TSYS, and we will be able to offer our unique products and services to the unbanked consumer faster than ever before."