Silver Lake takes Blackhawk private in $3.5bn deal

March 2018 | DEALFRONT | PRIVATE EQUITY & VENTURE CAPITAL

Financier Worldwide Magazine

March 2018 Issue

Blackhawk Network Holdings, Inc., a global financial technology company and a leader in prepaid gift, reward and incentive technologies and solutions, has announced that Silver Lake, a global leader in technology investing, and P2 Capital Partners have agreed to acquire Blackhawk in an all-cash transaction for a total consideration of approximately $3.5bn, including debt.

Under the terms of the definitive agreement, Blackhawk stockholders will receive $45.25 per share in cash upon closing of the transaction. The agreement has fully committed debt and equity financing, including an approximately $1.7bn equity commitment from Silver Lake. P2 Capital Partners, which beneficially owns approximately 5.4 percent of Blackhawk’s outstanding common stock, has committed to vote in favour of the proposed transaction.

Blackhawk’s board of directors has unanimously approved the definitive merger agreement – although the agreement does permit the board and its advisers to solicit, receive, evaluate and enter into negotiations with respect to alternative proposals – and recommends that stockholders vote in favour of the transaction. Upon completion of the transaction, Blackhawk will operate as a private company under the leadership of the current management team.

“After a thorough assessment, the board has determined that this transaction represents a compelling outcome for our stockholders, customers and employees,” said Bill Tauscher, executive chairman of Blackhawk. “It recognises the value of Blackhawk’s prospects while providing stockholders with an immediate cash value at a substantial premium.”

Talbott Roche, chief executive and president of Blackhawk, said: “Silver Lake and P2 Capital Partners bring the long-term focus, financial resources and technology expertise that can enable Blackhawk to accelerate growth initiatives globally and reach the company’s full potential.”

A global financial technology company and a leader in connecting brands and people through branded value solutions, Blackhawk platforms and solutions enable the management of stored value products, promotions and rewards programmes in retail, ecommerce, financial services and mobile wallets. Headquartered in Pleasanton, California, the firm operates in 26 countries.

“Blackhawk’s outstanding network of partners and proprietary technology creates a unique franchise in the payments industry with a proven ability to innovate in both the physical and digital segments,” said Mike Bingle, managing partner at Silver Lake. “We are excited to work with Blackhawk’s world-class management team and our new partners at P2 Capital Partners to strengthen the company’s position in large and growing parts of the financial technology ecosystem.”

With an estimated $39bn in combined assets under management and committed capital and a team of approximately 100 investment and value creation professionals located in Silicon Valley, New York, London, Hong Kong and Tokyo, Silver Lake is a recognised global leader in technology investing. The firm’s portfolio of investments collectively generates more than $140bn of revenue annually and employs more than 300,000 people globally.

Acting as financial adviser to Blackhawk in the transaction is Sandler O’Neill & Partners, L.P. Wachtell, Lipton, Rosen & Katz is serving as legal adviser. Acting as financial advisers to Silver Lake and providing debt financing to Blackhawk is Barclays, BofA Merrill Lynch, affiliates of Goldman, Sachs & Co. and J.P. Morgan. Citi is providing debt financing to Blackhawk while Simpson Thacher & Bartlett LLP is serving as Silver Lake’s legal adviser. Debevoise & Plimpton LLP is serving as legal adviser to P2 Capital Partners.

Expected to close mid-2018, the transaction is subject to customary closing conditions, including receipt of stockholder and regulatory approvals.

Alex Silver, a partner at P2 Capital partners concluded: “This transaction represents the best way to maximise value for all stockholders. We look forward to working with Silver Lake and Blackhawk management to drive the company’s next stage of growth.”

Fraser Tennant