January 7, 2016
Today, Blackhawk Network, a prepaid and payments network, announced the acquisition of two gift card-focused platforms—GiftCards.com and OmniCard—for approximately $120 million. FT Partners served as exclusive strategic and financial advisors to Omni Prepaid in this transaction.
The purchase price will be funded with both cash and borrowings under an existing credit facility. The acquisition is consistent with Blackhawk's growth strategy around its digital product expansion and is expected to be accretive to Blackhawk’s net income in fiscal 2016, as stated by the company’s press release.
The acquisition became effective on January 5, 2016 when Blackhawk purchased the ownership interests of Omni Prepaid from Wolfe, which resulted in the acquisition of GiftCards.com and OmniCard.
GiftCards.com sells digital and physical prepaid gift card solutions to consumers through a high-traffic US gift card website. The website offers differentiating features, including its GiftLocal product, which uses the open network as a gift card solution for local merchants and a "virtual" Visa gift card delivered by email or a mobile app. OmniCard sells customized prepaid incentive and reward solutions for business clients.
Talbott Roche, Blackhawk Network's President, shared in the official press release, "We're excited to add another gift card website to our roster; with GiftCards.com often ranking high in search engine results, this acquisition is expected to enhance Blackhawk's leadership in the gift card e-commerce market. By merging our current e-commerce offerings and the distinctive assets offered by GiftCards.com, we'll be able to deliver the broadest selection of gift cards to current and future customers, both individual consumers and corporate buyers."
Jason Wolfe, CEO of GiftCards.com, commented that the acquisition is an exciting moment for the company as they couldn’t see a better partner than Blackhawk. "We're confident that our customers will benefit significantly from the expanded reach, products and services that Blackhawk has to offer," he added.
"By adding GiftCards.com to Blackhawk's suite of gift card e-commerce solutions, we expect to broaden our open and closed-loop product offerings and provide more ways customers can purchase gift cards through more websites and mobile applications," said David Jones, General Manager of Global Digital and E-Commerce at Blackhawk Network. "The GiftCards.com team has built a leading solution for online and the business fits extremely well with our digital solutions direction and vision."
Gift cards are a go-to gift-giving option and have been the most requested gift item nine years in a row according to the National Retail Federation. As Blackhawk has been actively involved in the gift cards industry, its recent survey shows that despite a high sales volume, 51% of surveyed consumers have unused gift cards. If fact, 53% of shoppers receive gift cards and forget about them. Blackhawk is trying to put those cards in use and provide a better experience for shoppers with its gift card exchange company Cardpool.
Prepaid card growth has been fueled by multiple factors like providing electronic payments to those outside the banking system, serving as a cost-effective alternative to cash and checks for both businesses and governments. Prepaid cards are payment cards with a stored value on the card itself unlike debit cards, where an external account is maintained by a financial institution, or credit cards, which are subject to the credit limits set by the issuer. Another benefit prepaid cards provide is the segmentation of spending by consumers for areas such as travel, online shopping, m-commerce, etc. The LTP team has performed a thorough research on prepaid and gift cards market in the US to provide an industry overview and trends in a crisp report.