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Green Dot Acquires Wal-Mart's Cards

Zacks Equity Research

Green Dot Bank, the subsidiary bank of Green Dot Corporation (GDOT), recently announced that it has entered into a definitive agreement with GE Money Bank, a subsidiary of General Electric Company (GE), to acquire reloadable prepaid cards bearing the marks of Wal-Mart Stores Inc. (WMT).

Shares of Green Dot jumped 10.07%, following the news of the acquisition to close near its day's high of $19.36, also crossing its 3-month average traded volume.

Per the agreement, GE Bank will transfer all the deposits underlying the prepaid card at face value to Green Dot Bank and the latter will in turn assume certain liabilities of GE Bank, including its obligation to Walmart under a previously amended and restated prepaid card program agreement dated May 27, 2010. The deal is expected to be complete by the second half of 2013, subject to regulatory approvals.

As the stock prices soared 10% with the news, investors also appear to be optimistic about Green Dot’s association with the Walmart brand as it might boost its revenue, going forward.

Industry experts believe that the replacement of GE Bank by Green Dot Bank as the issuing bank for Wal-Mart prepaid card is modestly positive for Green Dot and have maintained their previous rating, citing competitive and valuation concerns.

Based in CA, Green Dot provides low-cost banking and payment solutions. Its main objective is to reinvent personal banking for the masses through a portfolio of financial services available across a wide array of retail locations nationwide.

Green Dot currently carries a Zacks Rank #2 (Buy). Another stock within the industry worth a look include Fidelity National Information Services, Inc. (FIS), which carries a Zacks Rank #2(Buy).

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