Market Overview

Green Dot Corporation To Offer Tax Refund Service Through Acquisition


Green Dot Corporation (NYSE: GDOT) cut its 2015 earnings outlook by nearly nine percent and announced the $320 million acquisition of the tax refund service provider Santa Barbara Tax Products Group.

Green Dot traded recently at $19.62 per share, up 3.6 percent.

Green Dot, a Pasadena, California-based prepaid card provider, expects its acquisition will boost 2015 earnings, but nearly all of Santa Barbara's business is conducted during the four-month tax season beginning in January.

About half of the tax refunds loaded into Green Dot cards last season were processed through Santa Barbara Tax Products last year, and Green Dot believes "the majority" of such refunds loaded to all prepaid cards industry wide were processed through the company.

Santa Barbara Tax Products aims its services at low and middle-income customers and maintains distribution partnerships with large tax preparation companies, as well as independent tax preparers.

The acquisition, in a cash and stock deal, will result in about $6 million in additional operating expense for Green Dot in the current year.

"We're optimistic about what we can accomplish in the remainder of the year," Chief Financial Officer Grace Wang said. "But we think it is best to adjust our revenue guidance now to reflect the most likely range of outcomes based on current trends.”

Green Dot now expects 2015 earnings of between $1.25 to $1.29 per share, down from its July forecast of $1.37 to $1.41 per share. Analysts expected $1.42 per share.

Green Dot, with a market capitalization of about $891 million, obtained about 64 percent of 2013 revenue from prepaid cards and other financial services distributed through Wal-Mart Stores, Inc. Another 22 percent of revenue came through three other large retail chains.

Posted-In: News M&A Intraday Update


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