Total System Services, Inc
) closed the acquisition of prepaid debit card provider NetSpend
Holdings, Inc. In Feb 2013, the financial transaction service
provider inked a deal to acquire NetSpend for $1.4 billion.
As per the deal, NetSpend stockholders will receive $16.00 per
share in cash for each share of NetSpend common stock holding.
Following the acquisition, NetSpend became Total System's fourth
operating segment focusing on direct to consumer products and
services. Chief executive officer Dan Henry and president Chuck
Harris will continue to lead NetSpend, reporting directly to Troy
Woods, president and chief operating officer of Total System.
Total System expects the acquisition to enhance its footprint in
the prepaid industry as well as boost its inorganic growth
profile. NetSpend will not only diversify Total System's business
basket but also help it penetrate deeper into the electronic
financial services market. The acquisition is expected to
complement Total System's long-term growth strategy to enhance
its top-line growth through a diversified portfolio.
The addition of this rapidly growing prepaid card business
will enhance the company's operating and competitive leverage as
this card segment is beyond the stringent regulations faced by
the credit and debit cards.
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With over 2.4 million accounts, 500 retail distributors and
130,000 reload locations; NetSpend has a wide distribution
network for its prepaid cards. It also offers corporate payroll
card solutions through its strong online, mobile and direct
Total System continues to develop and enhance its processing
solutions through strategic acquisitions and by developing
solutions to expand its service offerings. Thus far, most of the
company's acquisitions were in the merchant acquiring space.
Total System currently carries a Zacks Rank #3 (Hold). While we
currently remain on the sidelines for Total System,
) with a Zacks Rank #1 (Strong Buy) appears attractive.
Official Payments Holdings, Inc
Green Dot Corporation
) carrying a Zacks Rank #2 (Buy) are also worth noting.