A definitive agreement was announced between Green Dot and Santa Barbara TPG for the acquisition.

Green Dot has entered into a definitive agreement to acquire Santa Barbara Tax Products Group for approximately $320 million in cash and stock plus additional contingent consideration. Green Dot Corporation and its wholly-owned subsidiary bank, Green Dot Bank, are focused on providing low and moderate income American families financial products and services. These includes prepaid cards, checking accounts and cash processing services which are provided through a network of some 95,000 retail stores, service centers, and through digital channels.

Green Dot’s reach will significantly expand into its core customer segment by adding tax refund processing services for millions of tax filers. Green Dot plans to provide this through distribution partnerships tax preparation companies that are trusted by millions of American tax filers and through thousands of independent tax preparers.

Steve Streit, Founder, Chairman and Chief Executive Officer, Green Dot Corporation has mentioned in an exclusive interview: “We believe TPG is a great acquisition for our investors and the customers and business partners of both entities.” He added “From a financial perspective, we expect the transaction to generate mid-teens percentage accretion to 2015 non-GAAP earnings per share1. Furthermore, the transaction is expected to expand Green Dot’s margins thereby enabling Green Dot to generate higher and more diversified earnings. Additionally, TPG’s robust cash flow model is expected to augment Green Dot’s already strong annual cash flows.”

Mr. Streit continued, “In addition to the expected economic benefits, we believe this acquisition is strategically compelling. The segments of consumers who utilize TPG’s services are highly correlated to Green Dot’s customer segment of LMI American families. As a point of reference, more than 50% of all tax refunds loaded to Green Dot’s prepaid cards in the most recent tax season was processed by TPG. Furthermore, in the same period, we believe the majority of tax refund dollars loaded to all prepaid cards industry-wide was processed through TPG. Given the strong correlation between customer segments, we believe that, over time, there is a significant revenue opportunity in bundling Green Dot’s award winning prepaid cards and checking accounts along with TPG’s industry leading consumer tax refund processing services.”

On the other hand, Rich Turner, Founder and Executive Chairman, TPG mentioned in his interview: “TPG is known for treating its partners, customers and industry stakeholders with dedication, transparency, integrity and a mission to provide highly valuable and highly trusted processing and settlement services to the tax industry. Green Dot is the perfect match for our business since it too shares a mission of dedication and integrity towards its customers and business partners. Furthermore, we believe Green Dot’s industry-leading product suite, its award-winning technology capabilities, its strong financial resources, and its well-known and trusted national brand name will likely provide meaningful growth and long-term sustainability for our partners and for our business.”

Green Dot expects to generate approximately $85 million of tax benefits from this acquisition, bringing the net transaction value of the transaction to approximately $235 million-or 5.2 times TPG’s FY 2014 EBITDA. The transaction terms also include a potential $80 million cash earn-out payable to TPG investors based on TPG meeting certain pre-determined performance targets over the next three years.

The transaction will be funded with $55 million in cash, $150 million in new bank debt, and approximately 6.133 million shares of Green Dot class a common stock. Post-closing, TPG investors will own, in the aggregate, approximately 10.5% of the fully diluted shares of the combined amount.

A.L. Mijares

About Green Dot

Green Dot Corporation is a US company and issuer of prepaid MasterCard and VISA cards. These products are used and accepted at more than 60,000 retail stores, including CVS, Rite Aid, Walgreens, and RadioShack; and discount cards for Meijer and Walmart. The company also provides transfers direct deposit funds (such as Social Security payments) from the US government to personal bank accounts for their customers. Green Dot is headquartered in Pasadena, California, and it was formerly known as Next Estate Communications. Green Dot stock market evolution:

http://finance.yahoo.com/q?s=GDOT

About Steve Streit

Steve Streit is the founder and chief executive of Green Dot Corporation. In 2011, under Mr. Streit’s leadership, Green Dot purchased of Bonneville Bank in Provo, Utah.  Green Dot’s subsequently acquired mobile geolocation start-up Loopt and this led to the development of GoBank, the first bank account to be used on a mobile device.

About Santa Barbara Tax Products Group

TPG is a tax refund processing and settlement engine of numerous tax preparation companies. The company’s services are integrated into the offerings of the nation’s leading tax software companies.  TPG services cover up to 25,000 independent tax preparers and accountants nationwide. TPG has processed approximately $32 billion in tax refunds on behalf of approximately 11 million U.S. tax filers according to its recent records.  For the fiscal year ended June 30, 2014, TPG generated approximately $45 million of EBITDA.

About Rich Turner

Richard Turner is the CEO of Santa Barbara Tax Products Group, LLC with headquarters at Santa Barbara, California, USA.