Green Dot Buys Santa Barbara Tax Products Group

Sep 30, 2014

Green Dot to purchase Santa Barbara Tax Products Group (TPG) in a 320 million dollar deal. The sale will be funded with $55 million cash, $150 million in bank debts and approx. 6.133 million shares of its common stock. Which means that TPG investors will own approximately 10.5% of the both companies together.

Green Dot Corporation, who also owns Green Dot Bank, services mainly Low and Moderate Income American families with their financial products and services. This includes checking accounts, prepaid cards and cash processing services. These amenities are available in approximately 95,000 retail stores, neighborhood financial service centers and via digital channels. Green Dot Bank is located in Provo, Utah with the company headquarters in Pasadena, California.

What does this mean for Green Dots future? It doesn’t mean an immediate outpouring of new clients yet, this will come more gradually around the 2016 tax season based on how many of the 11 million SBTPG refunds that Green Dot can retain to use their prepaid cards. The company expects its operation expenses to increase by around $6 yet this year which will reduce the EBITDA to $122-126 million. However there is no expectation of the operation revenues to be impacted.

The CFO of Green Dot, Grace Wang announced, “We will soon be announcing a significant new program that we believe can have a material impact to our company’s performance overtime.” I think we just received that major announcement. Green Dot and Wal-Mart launched their mobile app checking account called GoBank. A starter kit can be purchased at Wal mart for $2.95 plus there is an $8.95 monthly fee, unless you set up your direct deposit of at least $500. GoBank features a budgeting tool as well as a Fortune Teller option that gives customers advice on purchases based on their budget. One of the sayings is “Remember that time you won the lottery? I don’t either.” At least it makes you smile while letting you down gently.

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