Transaction Expected to Generate Significant Strategic and Financial
Synergies
PASADENA, Calif.--(BUSINESS WIRE)--Jan. 30, 2017--
Green Dot Corporation (NYSE:GDOT) today announced that it has entered
into an agreement to acquire UniRush, LLC, and its operating businesses
RushCard, a leading online direct-to-consumer general purpose reloadable
prepaid card provider, and Rapid! PayCard, a leading corporate payroll
card provider. The acquisition, which maps to “Step Five” of Green Dot’s
“Six Step Plan” to enhance shareholder value, materially expands Green
Dot’s scale with the addition of the RushCard and Rapid! PayCard
installed customer bases, while establishing Green Dot as a formidable
player in the growing corporate payroll card and wage disbursement
market. The acquisition is expected to close prior to the end of Q1,
subject to customary closing conditions.
Said Steve Streit, Green Dot’s Founder and CEO, “As one of the largest
and most successful FinTech banking franchises in America, Green Dot has
proven its ability to efficiently integrate highly accretive
acquisitions. We believe the acquisition of UniRush, LLC, including the
RushCard business and the Rapid! PayCard corporate payroll card business
will be a strategic and financial success in both the near and long
term. In particular, the RushCard program has for many years been one of
the most important and respected prepaid programs in America with a
mission espoused by its legendary founder, Russell Simmons, strikingly
similar to that of Green Dot’s long time mission- to reinvent personal
banking for the masses and to empower the unempowered. I am delighted to
continue my long relationship with Russell and am eager to partner with
the UniRush team to serve the customers we both care so much about while
focusing on generating a strong economic return for Green Dot investors.”
Russell Simmons, RushCard co-founder, stated, “Fourteen years ago I
embarked on an incredible journey to provide a new financial tool for
millions of Americans who had only limited access to traditional banks.
As I have done with my ventures in music, comedy and fashion, I am
partnering with the best company in the industry, Green Dot, to expand
our opportunities and continue our mission to revolutionize the banking
industry. We believe our customers are among the most loyal in prepaid
and I want to thank them for their years of support. We are excited to
continue and expand upon our tradition of providing great and important
products for our customers over the many years to come.”
Ron Hynes, UniRush CEO, stated, “This is an extraordinary milestone for
UniRush, LLC., made possible by the hard work and dedication of each of
the RushCard and Rapid! PayCard employees who have built our business to
what it is today. Green Dot can now provide the scale and resources
necessary to greatly expand our reach and to more efficiently deliver
our innovative products and services to the millions of Americans who
need them. We are all looking forward to joining forces with Green Dot,
and I am thrilled to be working alongside two of the pioneers of the
industry in Russell Simmons and now Steve Streit.”
Financial Details:
Price: Green Dot will acquire
UniRush, LLC for $147 million plus a minimum $4 million annual earn-out
payment for five years post closing. The annual earn-out payment could
become greater if certain revenue growth hurdles applied to the RushCard
general purpose reloadable prepaid card program are achieved in a given
year, although any potential increase is not expected to be material to
the overall price of the acquisition. The acquired company will be
debt-free and cash-free at the time of closing with the exception of
working capital items. In the event that there is a regulatory finding
and a resulting financial obligation to UniRush, LLC stemming from the
2015 RushCard processing incident, such regulatory resolution and the
associated financial obligation will belong to the seller with such
obligation expected to be fully resolved prior to closing. Lastly, Green
Dot will be indemnified through a cash escrow reserve, funded by the
seller, in respect of the acquired company's prior operations.
Tax Benefits: Green Dot expects to
realize approximately $44 million in tax benefits on a net present value
basis, bringing the net cost of the acquisition, including the minimum
earn-out payments, to $123 million.
2017 Income Statement Impact:
Assuming the transaction closes at the end of Q1, for 2017 on a
pre-synergies stand-alone basis, Green Dot projects that the acquired
business will generate a range of approximately $70-$80 million in
incremental non-GAAP adjusted revenue, a range of $7-$8 million in
incremental adjusted EBITDA and a range of non-GAAP fully diluted
incremental earnings per share of $0.04 to $0.05, net of interest
expense related to deal financing.
Purchase Price Multiple: At the
midpoint of Green Dot’s annualized projected 2017 adjusted EBITDA for
the acquired business on a pre-synergies stand-alone basis, based upon
the total purchase price including the minimum future period earn-out
payments due under the agreement, but net of expected tax benefits, the
acquisition represents a purchase price multiple of approximately 12.3x
adjusted EBITDA. Post synergies, which the company expects to largely
realize within 12-18 months of closing, the acquisition is expected to
represent a forward-looking purchase price multiple of 5x-6x adjusted
EBITDA.
Form of Consideration: Closing
consideration will be paid using a mixture of cash on-hand and new debt.
Future Use of Capital: Green Dot
reiterates its intent to acquire an additional $50 million of its shares
in 2017.
Strategic Rationale:
Scale: The RushCard general purpose
reloadable prepaid card program is one of America’s most established
prepaid programs with the majority of its active customers being
highly-valuable, long-term direct deposit cardholders. We believe the
Rapid! PayCard corporate payroll card program is one of the fastest
growing payroll card companies in America, serving over 2500 corporate
customers with PayCards and associated services. Together, these two
UniRush programs are expected to add over 750,000 new active cardholders
to Green Dot’s highly-efficient and vertically integrated FinTech
banking platform.
Business Synergies: As a
direct-to-consumer online business, following the acquisition, the
RushCard program will be consolidated into the “Green Dot Direct”
division that houses GreenDot.com, GreenDot.com/Platinum Secured Visa
Credit Card, WalmartMoneyCard.com, AccountNow.com, AchieveCard.com,
GoBank.com and ReadyDebit.com. With the UniRush acquisition, Green Dot
will rank among the nation’s largest mobile, online and direct mail
“direct-to-consumer” providers of bank accounts, debit cards and related
financial services. Furthermore, Green Dot expects the UniRush
acquisition to enhance its Green Dot Direct division’s growth prospects
amongst the tech-savvy urban and millennial consumer segments of the
financial services market where the RushCard program has traditionally
excelled.
Rapid! PayCard, when added to Green Dot’s existing PayCard business and
its growing 1099 wage disbursement business, is expected to rank the
consolidated platform as a top 5 corporate payroll card provider
nationwide, giving Green Dot the scale and expertise to become a
formidable player in the growing corporate payroll card and 1099 wage
disbursement space.
Earnings Conference Call
The Company will discuss the acquisition, the financial impact to Green
Dot’s fiscal 2017 outlook, and 2017 financial guidance on the Company’s
fourth quarter and 2016 earnings conference call on February 22, 2017.
Advisors
BofA Merrill Lynch acted as financial advisor to Green Dot in connection
with the acquisition and Strategic Law Partners, LLC served as Green
Dot’s legal counsel. William Blair acted as financial advisor for
UniRush and Debevoise Plimpton served as UniRush’s legal counsel.
Forward-Looking Statements
This announcement contains forward-looking statements, which are subject
to the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995. These statements include, among other things,
statements regarding the acquisition of UniRush and the time frame in
which this will occur, the expected benefits to Green Dot and its
customers, stockholders and investors from completing the acquisition,
including without limitation expected incremental non-GAAP adjusted
revenue, adjusted EBITDA and non-GAAP fully diluted incremental earnings
per share, the tax benefits expected to be derived therefrom, the
projected purchase price multiple in 12-18 months, expansion of Green
Dot’s addressable market and customer base, integration and synergy
efforts, and the potential benefits to be derived therefrom, and the
sufficiency of the escrow fund to cover expenses incurred by the buyer
related to the settlement of any past, present or future claims made in
relation to the acquired company’s prior operations. Actual results may
differ materially from those contained in the forward-looking statements
contained in this announcement. The potential risks and uncertainties
that could cause actual results to differ from those projected include,
among other things, the businesses of the Company and UniRush may not be
combined successfully, or such combination may take longer, be more
difficult, time-consuming or costly to accomplish than expected; the
risk that the acquisition of UniRush may not occur or that sales of
RushCard or Rapid! PayCard products and services will not be as high as
anticipated; the expected growth opportunities, tax benefits, or cost
savings from the acquisition may not be fully realized or may take
longer to realize than expected; customer losses and business disruption
following the acquisition, including adverse effects on relationships
with former employees of UniRush, may be greater than expected; and the
risk that the Company may incur unanticipated or unknown losses or
liabilities if it completes the acquisition of UniRush. Additional
factors, that could cause actual results to differ materially from those
expressed in the forward-looking statements include the timing and
impact of revenue growth activities, the Company’s dependence on
revenues derived from Walmart and three other retail distributors,
impact of competition, the Company's reliance on retail distributors for
the promotion of its products and services, demand for the Company's new
and existing products and services, continued and improving returns from
the Company's investments in new growth initiatives, the extent to which
the Company’s processing technology partner covers the Company’s
expenses and other losses associated with the processor migration issues
that began in May 2016 and have caused a delay in the Company’s
processor migration until at least the first half of 2017, potential
difficulties in integrating operations of acquired entities and acquired
technologies, the Company's ability to operate in a highly regulated
environment, changes to existing laws or regulations affecting the
Company's operating methods or economics, the Company's reliance on
third-party vendors, changes in credit card association or other network
rules or standards, changes in card association and debit network fees
or products or interchange rates, instances of fraud developments in the
prepaid financial services industry that impact prepaid debit card usage
generally, business interruption or systems failure, and the Company's
involvement litigation or investigations. These and other risks are
discussed in greater detail in the Company's Securities and Exchange
Commission filings, including its most recent annual report on Form 10-K
and quarterly report on Form 10-Q, which are available on the Company's
investor relations website at ir.greendot.com and on the SEC website at www.sec.gov.
All information provided in this release and in the attachments is as of
January 30, 2017, and the Company assumes no obligation to update this
information as a result of future events or developments.
About Green Dot
Green Dot Corporation, along with its wholly owned subsidiary bank,
Green Dot Bank, is a bank holding company regulated by the Board of
Governors of the Federal Reserve System and the Utah Department of
Financial Institutions. Green Dot is widely recognized as the inventor
of the prepaid debit card industry and is the largest provider of
reloadable prepaid debit cards and cash reload processing services in
the United States. Green Dot is also a leading financial technology
company and the largest processor of tax refund disbursements in the
U.S. through its wholly owned subsidiary, TPG. Green Dot is also a
leading provider of mobile banking with its GoBank checking account sold
at retailers nationwide and through integrated technology partners.
Green Dot's products and services are available to consumers through a
distribution network of more than 100,000 U.S. locations, as well as
online, in the leading app stores and through leading online tax
preparation providers. Headquartered in Pasadena, Calif., it has
additional facilities throughout the United States and in Shanghai,
China.
About UniRush, LLC
UniRush, LLC, which helped pioneer the prepaid debit card industry with
the Prepaid Visa RushCard, one of the first general purpose reloadable
prepaid debit cards in the marketplace, provides members with access to
services that enable them to achieve their personal and financial goals.
UniRush offers Americans an array of basic financial services via the
RushCard. To learn more about the RushCard, visit www.rushcard.com
or find us at Facebook.com/Rushcard
or on Twitter @RushCard.
View source version on businesswire.com: http://www.businesswire.com/news/home/20170130006094/en/
Source: Green Dot Corporation
For Green Dot Corporation:
Investor Relations
626-765-2427
IR@greendot.com
or
Media
Relations
Brian Ruby, 203-682-8268
Brian.Ruby@icrinc.com