TSYS Buying Netspend for $1.4 Billion

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On Tuesday, electronic payments facilitator TSYSannounced that it has entered into a definitive agreement to purchase prepaid card provider NetSpend for $16 a share, cash, in a transaction valued at $1.4 billion in total.

NetSpend brings with it an "extensive" distribution network selling prepaid debit cards at more than 62,000 locations, including retailers, check-cashing stores, income-tax preparers, and others, and a customer list stretching to more than 2.4 million accounts -- of which 46% are direct deposit accounts.

In a statement, TSYS said it believes the prepaid-debit-card market is likely to grow at 20% annually over the next four years. The company believes its purchase of NetSpend will be accretive to profits within a year after closing (planned for mid-2013), not counting the costs of acquisition related fees and expenses.


Shareholders, however, were unimpressed, bidding down TSYS shares 6.4% in Wednesday trading after the announcement. The shares closed Wednesday at $21.97. As for NetSpend, its shares rose sharply -- up 28.6% to close at $15.81, a bit below the offer price.

The article TSYS Buying Netspend for $1.4 Billion originally appeared on Fool.com.

Fool contributor Rich Smith and The Motley Fool have no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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