Safeway, Blackhawk Extend Exclusive Prepaid Card Distribution Deal
Prepaid products supplier comments on parent's merger agreement with Albertson's
PLEASANTON, Calif. -- Following the announcementThursday of the merger of supermarket companies Safeway Inc. and Albertson's LLC, Blackhawk Network Holdings Inc. parent company Safeway affirmed its intention to distribute its 37.8 million shares of Blackhawk common stock to Safeway shareholders.
Safeway said that it expects to complete the distribution by mid-April.
The distribution of Blackhawk shares is not dependent upon the completion of Safeway's merger with Albertson's; Safeway is undertaking it for independent business reasons.
Blackhawk has conducted day-to-day operations of its prepaid products business independently for the past two years, except for sharing tax and treasury management functions. As a result, Safeway's change in ownership will not adversely impact Blackhawk's operations and the distribution by Safeway will complete Blackhawk's independence as a standalone public company.
"Safeway has been a tremendous asset as Blackhawk's parent company, and we've worked closely together to build a powerful prepaid payments company," Bill Tauscher, Blackhawk CEO, said. "But Safeway also recognized early on that, in order for Blackhawk to build a leading third-party gift card business, Blackhawk would need to operate independently and partner with many grocery retailers that compete with Safeway. Safeway's board of directors recently concluded that to further build on Blackhawk's past successes and maximize our value, Safeway's divestiture of its remaining ownership in Blackhawk would open up additional market opportunities for us."
Independent of its merger with Albertson's, Safeway previously announced its intention to spin off its ownership in Blackhawk. As part of the merger agreement, the buyer will assume the corporate tax on the distribution of Blackhawk shares to Safeway shareholders.
Blackhawk also recently extended its distribution agreement with Safeway to be its exclusive provider of prepaid products in all its U.S. grocery stores through 2019 (presently 1,335 stores). Under the agreement, Safeway will continue to sell Blackhawk's full range of prepaid products including prepaid gift cards, prepaid telecom products and general purpose reloadable debit products. All other terms of the agreement remain unchanged.
Blackhawk is also the prepaid products supplier to Albertson's. Together, Safeway and Albertson's operate under a variety of banners in 34 states and the District of Columbia.
Pleasanton, Calif.-based Blackhawk supports the physical and digital distribution of a variety of prepaid products. It uses proprietary technology to provide consumers a variety of gift cards, prepaid telecom handsets, airtime cards and general-purpose reloadable cards across a global network totaling more than 180,000 stores. Through its digital platform, the company supports prepaid products and offers across a growing network of digital distribution partners including leading online retailers, financial service providers, social apps, mobile wallets and other integrated physical-to-digital channels.