MCLEAN, Va., Aug. 7 /PRNewswire-FirstCall/ -- Capital One Financial
Corporation (NYSE: COF) today announced that it has entered into a
definitive agreement under which it will acquire NetSpend Holdings, Inc.,
the parent company of NetSpend Corporation, a leading retail marketer of
prepaid debit cards, for $700 million in an all-cash transaction.
On a GAAP basis, the transaction, including the associated integration
costs, is not expected to have a material effect on Capital One's earnings
per share in 2007 or in 2008, and is expected to be accretive in 2009. On
an operating basis, excluding integration costs, the transaction is
expected to be accretive in 2008.
"This transaction is financially compelling," said Scott Grimes,
Capital One's Senior Vice President, Payments. "NetSpend is profitable
today, and based on extensive due diligence, we're confident that the
combined capabilities of both companies position us to deliver strong
profit growth in the future."
The prepaid debit market is experiencing significant growth, is
attractive to a wide range of consumers, and leverages Capital One's core
strengths in credit cards and banking. Prepaid debit cards offer a
flexible, safe and reliable alternative to cash for millions of consumers.
The acquisition will expand upon the company's existing strategic
partnership with NetSpend and further Capital One's ability to offer
consumers a broader range of payment solutions while extending its brand
through NetSpend's strong retail presence.
"Capital One offers innovative debit and credit products to help meet
consumers' needs regardless of how they spend and manage their money," said
Grimes. "With NetSpend's broad network of merchant partners, this
acquisition immediately adds a powerful channel and further extends Capital
One's prepaid solutions to the retail environment."
With more than 1.5 million active customers nationwide, NetSpend has
one of the most convenient and accessible retail networks in the country,
including more than 15,000 locations where cards can be purchased and
50,000 locations where funds can be loaded onto the card. In addition,
NetSpend offers products and services online through its website.
NetSpend's Chief Executive Officer, Richard Savard, will continue to
lead the prepaid business after the acquisition has been finalized and will
assume a key executive role within Capital One's Payments business.
"We consider Capital One to be among the best payment and card
marketers in the country," said Savard. "This transaction is the natural
next step for our company. It enables us to accelerate the success we have
had addressing the 70 million U.S. citizens who lack or choose not to have
a traditional bank account. Combining our resources with Capital One
expands NetSpend's ability to deliver products that drive sales and loyalty
for our merchant partners. As an important part of Capital One, we look
forward to driving our business and the prepaid industry to the next
NetSpend's proprietary, end-to-end approach is scalable and
customizable, delivering cost benefits and revenue building opportunities
to partners. NetSpend distribution relationships with leading retailers
include Safeway, Pathmark, HEB Grocery Stores, and ACE America's Cash
Express. NetSpend manages all aspects of the debit card lifecycle, from the
card design and approval processes with partners and associations, to
production, packaging, distribution, and personalization. NetSpend also
oversees inventory and security controls, renewals, lost and stolen card
management and replacement.
Under the terms of the agreement, NetSpend will become a subsidiary of
Capital One, N.A. The transaction, which was approved by the board of
directors of Capital One and NetSpend is subject to customary regulatory
approvals and notifications and is expected to close in the fourth quarter
The company cautions that current expectations in this release for
earnings, synergies and strategy are forward-looking statements and actual
results could differ materially from current expectations due to a number
of factors, including competition in the prepaid, debit, and gift card
business; the company's ability to integrate operational and distribution
platforms; and general economic conditions affecting consumer income and
spending. A discussion of these and other factors can be found in Capital
One's annual reports and other reports filed with the Securities and
Exchange Commission, including, but not limited to, Capital One's report on
Form 10-k for the fiscal year 2007.
About Capital One
Headquartered in McLean, Virginia, Capital One Financial Corporation
(http://www.capitalone.com) is a financial holding company, with 725
locations in New York, New Jersey, Connecticut, Texas and Louisiana. Its
principal subsidiaries, Capital One Bank, Capital One Auto Finance, Inc.,
and Capital One, N.A., offer a broad spectrum of financial products and
services to consumers, small businesses and commercial clients. Capital
One's subsidiaries collectively had $85.7 billion in deposits and $144.2
billion in managed loans outstanding as of June 30, 2007. Capital One, a
Fortune 500 company, trades on the New York Stock Exchange under the symbol
"COF" and is included in the S&P 100 index.
NetSpend Corporation is one of the premier providers of innovative,
accessible prepaid debit cards that enable financial freedom for
under-banked consumers. Grounded by a mission of financial empowerment,
NetSpend is committed to meeting its customers' financial services needs on
their terms while offering the convenience, security and acceptance of
conventional financial services. NetSpend's proprietary processing platform
allows it to support prepaid card programs end-to-end from customer
acquisition and card fulfillment to customer service and risk management.
The NetSpend(R) Prepaid Card Network includes leading consumer brands and
companies serving the un- banked and under-banked markets, and its
strategic relationships include card issuers, EFT networks and payment card
associations. For more information, visit http://www.netspend.com.
SOURCE Capital One Financial Corporation