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Green Dot to acquire UniRush

Green Dot Corp. has agreed to acquire UniRush LLC and its operating businesses RushCard, an online direct-to-consumer general purpose reloadable prepaid card provider, as well as Rapid! PayCard, a corporate payroll card provider.

Green Dot will acquire UniRush for $147 million, plus a minimum $4 million annual earnout payment for five years after the deal closes. The earnout could be higher if certain revenue growth hurdles applied to the RushCard general purpose reloadable prepaid card program are achieved in a given year, but any possible increase is not expected to be material to the overall deal price. UniRush will be free of debt and cash at the deal's closing, except for working capital items. If there is a regulatory finding and resulting financial obligation to UniRush from a 2015 incident involving RushCard processing, the obligation will belong to the seller and is expected to be fully resolved before the deal closes. Green Dot will be indemnified through a cash escrow reserve funded by UniRush in respect of the latter company's prior operations.

Green Dot expects to realize about $44 million in tax benefits on a net present value basis, taking the deal's net cost, including minimum earnouts, to $123 million. The closing consideration will be paid using cash on hand and new debt.

The two UniRush programs are expected to add more than 750,000 new active cardholders to Green Dot's financial technology banking platform. After the deal closes, the RushCard program will be consolidated into the Green Dot Direct division.

The deal is expected to close before the end of the first quarter. Green Dot expects the acquired business to generate about $70 million to $80 million in incremental non-GAAP adjusted revenue, $7 million to $8 million in incremental adjusted EBITDA and 4 cents to 5 cents of non-GAAP incremental EPS, net of interest expense related to deal financing, for 2017 on a pre-synergies stand-alone basis.

At the midpoint of the annualized projected 2017 adjusted EBITDA for the acquired business, based on the total purchase price including the minimum earnouts but net of expected tax benefits, the acquisition represents a purchase price multiple of about 12.3x adjusted EBITDA. Post-synergies, which the company expects to realize largely within 12 to 18 months after the deal's closing, the acquisition is expected to represent a forward-looking purchase price multiple of 5x to 6x adjusted EBITDA.

For Green Dot, Bank of America Merrill Lynch acted as financial adviser, and Strategic Law Partners LLC acted as legal counsel. William Blair was UniRush's financial adviser, and Debevoise Plimpton served as legal counsel.