August 30, 2017

CashStar acquired by Calif. tech firm for $175 million

Courtesy / CashStar
Courtesy / CashStar
CashStar Inc. President and CEO Ben Kaplan will continue to manage the business following the $175 million acquisition of the Portland-based gift card company by a California technology company that was announced today.

CashStar Inc., a Portland-based provider of gift card commerce solutions, was acquired by a California tech company for $175 million in cash.

The acquisition, by Pleasanton, Calif.-based Blackhawk Network Holdings Inc. (NASDAQ: HAWK), is one of the largest recent deals for a Maine company. Only last year's deal for Putney Inc., at $200 million, exceeds this deal. Certify was acquired for $100 million.

CashStar will keep its offices in Maine and Massachusetts and continue to be led by President and CEO Ben Kaplan. It will become part of the digital and incentives business at Blackhawk, which operates in 26 countries.

CashStar's client roster totals 300 brands, including Sephora, Starbucks, Gap, The Home Depot, Uber and Walmart.

CashStar, which is based at 25 Pearl St. in Portland, has a total of 175 employees. Its Massachusetts office is in Waltham.

CashStar, which was co-founded in 2002 by David Stone, a 2012 Mainebiz Business Leader of the Year. It was started with help from Steven Boal, the founder of CashStar didn't sign its first client, Gorham Bike & Ski, until 2008. By 2011, according to a profile in Mainebiz, Stone was able to raise $28 million, mostly in Silicon Valley, though investors were skeptical about a company of this kind that wasn't based there, he said at the time.

Deal expands Blackhawk's gift card footprint

Tuesday's deal expands Blackhawk's footprint in first-party e-gift and gift cards and further strengthens its mobile and digital offerings, it said in a press release. The first-party gift card market transaction dollar volume is estimated in excess of $100 billion, with digital being the fastest-growing segment of that market.

CashStar's commerce platform enables retailers to market, sell and distribute digital and plastic gift cards in the first-party digital card business. With CashStar's flexible platform, merchants can use digital and physical gift cards to engage consumers throughout the customer lifecycle, including marketing and promotions, sales and customer service, Blackhawk said.

CashStar increases Blackhawk's offerings and deepens merchant relationships, while extending Blackhawk's strength in the third-party and incentives businesses to the large first-party market.

"The acquisition strategically enhances Blackhawk's ability to provide the right digital solutions to our partners to meet the changing needs of business customers and consumers," said Talbott Roche, CEO and president of Blackhawk Network. "With the addition of CashStar, Blackhawk is now a leading provider in the fast growing first-party digital market. Also, with CashStar margins projected in the range of 25% to 30% for fiscal 2018, Blackhawk maintains its focus on margin expansion."

For CashStar, the deal expands what it can offer clients.

"Joining forces with Blackhawk will help us deliver even more powerful capabilities and new revenue opportunities for our clients and partners," said Ben Kaplan, CEO and president of CashStar. "Together, we can provide merchants with unified end-to-end solutions for B2B and B2C gift card distribution. The combination of our platform and Blackhawk's product breadth and global reach creates innovative new applications for branded value and mobile payments. We couldn't be more excited."

CashStar becomes part of Blackhawk's digital and incentives businesses. Kaplan will continue to manage the business and report to Blackhawk General Manager of Digital and Incentives David Jones.

Blackhawk expects the deal to add $3 million to $5 million in adjusted net income by next year.

To complete the deal, Blackhawk used available cash and borrowings under the revolving credit facility.


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