Green Dot Corp. has agreed to buy Loopt. Green Dot is paying $43.4 million cash, which includes about $9.8 million to be set aside as a retention pool for key Loopt employees . The deal is expected to close by the end of first quarter. Loopt is maker of a mobile social mapping application. Loopt has raised more than $20 million in VC funding from firms like Sequoia Capital and NEA.
Green Dot Corporation (NYSE: GDOT), a provider of widely distributed, low-cost banking and payment solutions to a broad base of U.S. consumers, has entered into a definitive agreement to acquire Loopt, Inc., of Mountain View, California. The transaction is expected to close by the end of the first quarter of 2012 and is subject to regulatory approvals and other closing conditions.
The acquisition of Loopt will provide Green Dot with a number of key strategic benefits that are expected to a) improve customer acquisition and retention of its current prepaid debit card products, b) drive the adoption of new banking and payment products targeted to new segments of consumers, and c) provide the opportunity for Green Dot to become a leader in mobile wallets, rewards and payment solutions at retailers nationwide. Furthermore, Loopt holds several patents that are applicable to mobile marketing in the context of location-based messaging delivered real-time to a mobile handset. Green Dot believes that these patents will be important strategic assets as it pursues its mobile business opportunities.
“We believe that mobile phones have the potential to change the way people interact with their bank, control their money and pay for goods and services,” said Steve Streit, Chairman and CEO of Green Dot. “Loopt has innovative mobile technology, market leading mobile programming capabilities and compelling intellectual property. Meanwhile, Green Dot has a large customer base, a robust enterprise-level financial services infrastructure and retail point-of-sale financial transaction capabilities deployed at major retailers nationwide. When Loopt’s assets are layered into Green Dot’s platform, we believe that a significant opportunity emerges for Green Dot to become a large-scale player in mobile technology solutions at the retail point of sale.”
Loopt co-founder and CEO Sam Altman stated, “It’s been exhilarating to see mobile become such a critical part of our collective daily lives. As this technology truly reaches the masses, I believe we’re going to see the banking and payments industry fundamentally reshaped in a way that’s better for everyone. My team and I look forward to being part of this transformation and are eager to bring cutting edge mobile banking and payment solutions to Green Dot’s retail partners and Green Dot’s millions of current and future customers.”
Upon closing of the transaction, Loopt’s current headquarters in Mountain View, California will become the new Silicon Valley hub for Green Dot’s mobile technology and product development team.
Green Dot will pay total consideration of $43.4 million in cash for the company, which includes approximately $9.8 million to be set aside as a retention pool for key Loopt employees. Green Dot expects this transaction will result in approximately $14 million of incremental operating expenses during the remainder of this year which will reduce the Company’s previously guided 2012 full year adjusted EBITDA accordingly. This amount includes the above mentioned retention payments, ongoing salaries and benefits for retained Loopt employees, wind-down expenses of current Loopt services and other expenses associated with the costs of integrating Loopt’s technology into Green Dot’s operating infrastructure.
Green Dot will provide further details about this acquisition, including information on Green Dot’s mobile strategy, during its Q1 earnings call on April 26, 2012.
About Green Dot Corporation
Green Dot is a publicly traded (NYSE:GDOT) bank holding company regulated by the Board of Governors of the Federal Reserve System. The Company provides widely distributed, low cost banking and payment solutions to a broad base of U.S. consumers. Green Dot’s products and services include its market leading category of General Purpose Reloadable (GPR) prepaid cards and its industry-leading cash transfer network which are available directly to consumers online and through a network of approximately 59,000 retail stores nationwide where 95% of Americans shop. Green Dot is headquartered in the greater Los Angeles area. For more details, visit www.greendot.com.
This press release contains forward-looking statements, which are subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact are statements that could be deemed forward-looking statements. For example, statements regarding the key strategic benefits that Green Dot expects from the acquisition, their expected impact on Green Dot’s product and customer initiatives, the timing of closing and the projected financial impact to Green Dot are all forward-looking statements. Risks, uncertainties and assumptions include the possibility that the acquisition does not close or that the companies may be required to modify aspects of the transaction to achieve regulatory approval; the market for the sale of certain products and services may not develop as expected; that development of these products and services may not proceed as planned; that customer acceptance of any new products may not develop as expected; Green Dot’s limited experience with acquiring companies and technologies, potential difficulties in integrating operations of acquired companies and acquired technologies, and any unexpected increases in Green Dot’s other operating expenses. Additional risks and uncertainties are detailed in Green Dot’s filings with the Securities and Exchange Commission, including its annual report on Form 10-K, which is available on Green Dot’s investor relations website at ir.greendot.com and on the SEC website at www.sec.gov. All information provided in this release and in the attachments is as of March 8, 2012, and Green Dot assumes no obligation to update this information as a result of future events or developments.