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TSYS to Acquire NetSpend

Adam Rust's picture

Posted February 19, 2013

Six minutes ago, TSYS (ticker: TSS) announced that it will acquire NetSpend for $16 per share.

Fourteen months ago, BankTalk reported that NetSpend might be preparing itself for a sale. To me, it was odd that a growth company - an extreme one - would be

deploying almost all of its income into buying back shares. In the last year, net income was up 50 percent. NetSpend was cutting salary expense back in 2011, as well. You would think that they would want as much cash on hand as possible to fuel more investments. At least, that would be the likely case. Instead, NetSpend was paring down its debt. At the time, private equity firms JLL Funds and Oak Investment Partners, had large stakes in the company.

Payments Journal picked up on that entry and wrote it about it a few days later. Payments Journal rejected that opinion:

"NetSpend’s moves may be setting it up for the opposite of a sale. Its goal may be that it wants to hold more stock to use for buying another company. NetSpend also may want to avoid some of the gyrations that came last year when it announced that it was losing some distribution partners, causing its stock to take a large hit."

The deal gives TSYS a front end program manager to couple with its substantial payments processing capacity.

By the way, what's good for NetSpend is also good for Green Dot: their shares are trading at 20 percent above closing price in the after hours markets.

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