* TSYS to offer $16 for each NetSpend share
* Deal at 30 pct premium to NetSpend's Tuesday close
* TSYS expects deal to add to EPS for first 12 months after
* NetSpend shares rise to offer price in trading post bell
By Aman Shah
Feb 19 Payment processor Total System Services
Inc (TSYS) said it will buy prepaid debit card provider
NetSpend Holdings Inc for about $1.4 billion in cash to
expand its presence in the prepaid card market and target new
TSYS offered to pay $16 per share for NetSpend -- a premium
of 30 percent to the stock's Tuesday closing price.
NetSpend shares jumped to the offer price in trading after
the bell. TSYS shares were down marginally in post-market trade.
"We wanted to move beyond just prepaid processing for others
and move into the space directly," Troy Woods, TSYS president,
The deal is expected to add to GAAP earnings per share for
the first 12 months after closing, excluding fees and expenses,
Columbus, Georgia-based TSYS said in a statement.
TSYS, which was once part of regional lender Synovus
Financial Corp, now expects revenue growth of 8 to 10
percent in 2013, up from its earlier estimate of 6 to 8 percent.
NetSpend Chief Executive Dan Henry will continue to manage
the company, which will operate as a standalone business, TSYS
said in a regulatory filing.
NetSpend's ability to sustain its earnings power and
valuation has been questioned in recent times, given increased
competition from larger entrants.
"Even though we are a large player in the (prepaid
card)space, I believe that the space is very much at its
beginning stages and the total available market provides
tremendous growth opportunities," NetSpend CEO Dan Henry said in
an interview with Reuters.
NetSpend and Green Dot Corp pioneered, and for
about 10 years, dominated the sale of prepaid cards that people
without bank accounts can load up with value and use like a
However, the prepaid card market has become increasingly
crowded in recent years as big banks such as JPMorgan Chase & Co
and US Bancorp started to offer their own,
Green Dot's shares rose about 20 percent in after-market
trade to $17.49 on news of the deal involving its rival.
Houlihan Lokey was the financial adviser and King & Spalding
the legal counsel to TSYS for the deal. BofA Merrill Lynch was
the financial adviser and Fried Frank the legal counsel to