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Tickers in this Article: TSS, VNTV, OPAY, GDOT
Recently, Total System Services, Inc. (TSS) closed the acquisition of prepaid debit card provider NetSpend Holdings, Inc. In Feb 2013, the financial transaction service provider inked a deal to acquire NetSpend for $1.4 billion.

As per the deal, NetSpend stockholders will receive $16.00 per share in cash for each share of NetSpend common stock holding.

Following the acquisition, NetSpend became Total System’s fourth operating segment focusing on direct to consumer products and services. Chief executive officer Dan Henry and president Chuck Harris will continue to lead NetSpend, reporting directly to Troy Woods, president and chief operating officer of Total System.

Total System expects the acquisition to enhance its footprint in the prepaid industry as well as boost its inorganic growth profile. NetSpend will not only diversify Total System’s business basket but also help it penetrate deeper into the electronic financial services market. The acquisition is expected to complement Total System’s long-term growth strategy to enhance its top-line growth through a diversified portfolio.


The addition of this rapidly growing prepaid card business will enhance the company’s operating and competitive leverage as this card segment is beyond the stringent regulations faced by the credit and debit cards.

With over 2.4 million accounts, 500 retail distributors and 130,000 reload locations; NetSpend has a wide distribution network for its prepaid cards. It also offers corporate payroll card solutions through its strong online, mobile and direct marketing channels.

Total System continues to develop and enhance its processing solutions through strategic acquisitions and by developing solutions to expand its service offerings. Thus far, most of the company’s acquisitions were in the merchant acquiring space.

Total System currently carries a Zacks Rank #3 (Hold). While we currently remain on the sidelines for Total System, Vantiv, Inc. (VNTV) with a Zacks Rank #1 (Strong Buy) appears attractive. Official Payments Holdings, Inc. (OPAY) and Green Dot Corporation (GDOT) carrying a Zacks Rank #2 (Buy) are also worth noting.

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