Payments processor Global Payments said Thursday it’s putting its Netspend unit back on the sales block, reprising an effort reportedly made in 2020 when it put a $2 billion-plus price tag on the prepaid debit card business.
The Atlanta-based company aims to sell the consumer side of the Netspend business, and plans to keep the business-to-business assets as it refocuses on corporate clients, the company said in a Thursday press release that also announced fourth-quarter earnings.
"We seek to refine our portfolio mix by simplifying the composition of our businesses and maintaining a singular focus on our corporate customers," Global Payments CEO Jeff Sloan in the release. "As part of that initiative, we have commenced a strategic review of the Netspend consumer business; we intend to retain its B2B assets as we further expand this new pillar of our strategy."
Global Payments acquired the Netspend business in 2019 through its $21.5 billion acquisition of Total System Services, which had purchased the debit card company for $1.4 billion in 2013.
The reloadable debit card operation caters to the "underbanked" as well as other consumers, according to the annual filing Global Payments made last year with the Securities and Exchange Commission.
"The pivot has been quite some time in coming," Sloan said in discussing the company’s turn to a more exclusive pursuit of corporate clients. "We're really not a B2C-direct kind of company."
The B2B assets the company plans to keep represent only about 15% of the Netspend business, executives told analysts on a webcast to discuss the announcements.
Part of the reasoning for the sale is the limited overlap between the company’s "traditional merchant customer base" and the Netspend consumer business, analysts for the financial firm William Blair said in a Thursday report on the company’s announcements.
The overall Netspend operation represents about 10% of Global Payments revenue, with the consumer assets to be sold at about 5% of earnings before interest and taxes, analysts at the financial firm Baird estimated in a Thursday report on the company.
Fourth-quarter net income at Global Payments jumped 17.5% over the year-earlier quarter to $217.2 million, and its revenue for the period rose 13.7% to $2.2 billion, the release said. For the full year, net income jumped 63% over 2020 to $988 million as revenue increased 14.8% to $8.5 billion.
As for its acquisition strategy ballyhooed at an investor presentation last September, the company seems less interested at the moment in acquisitions and more interested in buying back its own stock.
"We have a long pipeline of opportunities, but I think we're very cognizant that we're generating really attractive returns by buying back the stock," Sloan said.
The company has $2 billion authorized for its stock buyback effort.