Pleasanton, CA-based Blackhawk Network, a prepaid and payments network, announced today that it will acquire all outstanding shares of Parago, Inc. for approximately $290 million. Lewisville, TX-based Parago is a global provider of incentive and engagement solutions. The purchase, says Blackhawk, will strengthen its ability to provide prepaid solutions for the global incentive and rewards marketplace.
"Blackhawk has continued to grow its business solutions in the prepaid payment industry around the world," said Bill Tauscher, Blackhawk's CEO, in a statement. "Adding Parago into our portfolio is a significant step forward for Blackhawk's expansion plans in the large but fragmented incentives market."
"Blackhawk is excited to add Parago's capabilities and leadership to our growing corporate incentive business," said Talbott Roche, Blackhawk's president. "Parago's award-winning solutions will allow us to deliver expanded capabilities and products and enhance Blackhawk's leadership position in the consumer and corporate incentives markets. Their business complements our solutions from InteliSpend and CardLab, two other leading incentives businesses that we acquired over the past 12 months."
Parago's client roster includes more than 250 clients, including Fortune 100 companies, multi-national corporations, and global consumer brands.
"Blackhawk brings an unprecedented opportunity for scale and globalization in the incentive and loyalty space, access to well-established prepaid content partnerships, as well as new digital and mobile technologies," said Juli Spottiswood, president and CEO of Parago. "As part of Blackhawk, we believe all our partners and customers will benefit from our expanded capabilities, products, and services."
Parago will operate as a subsidiary of Blackhawk Network and will remain headquartered in Texas. Spottiswood will lead Blackhawk's incentive business and report to Talbott Roche, Blackhawk Network president.
Blackhawk's purchase is subject to adjustment, and it plans to finance the purchase using cash on hand and approximately $200 million in new borrowings under an expansion of its current credit facility.
"We expect the acquisition will be meaningfully accretive in 2015, adding $24 million to $28 million in adjusted EBITDA and $8 million to $10 million in adjusted net income," said Jerry Ulrich, Blackhawk's chief financial and administrative officer. "In addition, it will generate solid cash flow and we will still have borrowing capacity under the increased credit facility."
The acquisition is expected to close by Oct. 31.