TSYS Pays $1.4B For Netspend, Which Will Remain Standalone Business

by Tim Sloane 0

As identified in the opening paragraphs of the PaymentSource article on this topic:

For the processor Total System Services, buying the prepaid card marketer NetSpend is transformational. For NetSpend it’s going to be business as usual, the companies say.

When the $1.4 billion all-cash acquisition is completed in mid-2013, TSYS will consider NetSpend its fourth line of business in addition to North America Services, International Services and Merchant Services. It will be the first time TSYS will own a business that sells directly to consumers.

It is interesting to note that after this acquisition, only two independent GPR program managers with significant volume remain. These remaining program managers will be identified in an upcoming PaymentsJournal Perspective (see link below), as well as the cause of this consolidation, which is directly related to the business model associated with operating a prepaid program.

In last night’s call regarding the acquisition, TSYS identified that it considers the NetSpend model in line with the TSYS “People Centered Payments” vision:

“We have never corporately or personally been in the consumer business, and part of their business is the consumer business,” says TSYS chairman and CEO Phil Tomlinson in an interview. “We really do think this is a transformational deal.”

For NetSpend, however, TSYS plans not to mess with what it considers to be a winning formula. “We’ve got the right people to manage it and run it,” he says.
TSYS is keeping NetSpend execs such as its CEO, Dan Henry, and its president, Chuck Harris. NetSpend will continue to operate out of Austin, Texas. TSYS announced the acquisition on Feb. 19 after the market closed.

“The most important thing to me is that NetSpend is going to be able to continue to fulfill its mission,” Henry said in a conference call after the acquisition was announced.”

The challenge, as it is with any acquisition, is to get the right balance between a “hands-off” approach that enables the acquired company to continue its growth, and a “integration strategy” that will leverage the acquiring company’s assets so that growth can expand into new markets.

Click here to read more from PaymentsSource. Read Tim Sloane’s Perspective about TSYS’s acquisition.

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