On Mar 18, Blackhawk Network Holdings, a subsidiary of
), announced the filing of the registration statement for the
highly anticipated initial public offering (IPO) of a minority
), BofA Merrill Lynch,
) and Deutsche Bank Securities under
) are the joint-book running managers for the public offering.
Earlier in Sep 2012, Safeway had revealed its plan to spin off
Blackhawk into a public company. According to its most recent
earnings call, Safeway expected to execute the transaction in the
first half of 2013.
The IPO will comprise solely of shares by current shareholders,
including Safeway. However, the company is yet to decide on the
number of shares and the price range for the offering.
Blackhawk provides prepaid products and payment services to
consumers through a network of retail store locations in the
U.S., Canada, Europe, Mexico and Australia along with various
online channels. These prepaid products include closed loop
(private branded) cards, open loop (network branded) cards,
financial services products and telecom products.
Additionally, Blackhawk provides card production services, a
secondary market for prepaid cards and has recently introduced
digital wallet services. Blackhawk also has gift card businesses
in UK and Australia.
In 2012, the load value of cards sold by Blackhawk increased 23%
compared with 25% growth in the previous year. The company is
optimistic about a strong 2013 for Blackhawk. In the interim, we
will be paying close attention to the IPO. With Blackhawk's IPO,
the company's growth profile will solely rely on its food and
drug retail business.
Management seems to have chalked out a strategic working plan to
support Safeway's ongoing positive business momentum after a
string of challenging quarters in the past. Following the public
offering, we expect the company to sharpen focus on its
mainstream retail operations and improve its competitive position
Thus, we look forward to fiscal 2013 with real optimism.
Accordingly, the stock carries a Zacks Rank #1 (Strong Buy).
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