Total System Services Inc. is buying debit card provider NetSpend for about $1.4 billion in cash to expand into the fast-growing prepaid card business.
The deal will give the payment services company access to the roughly 68 million "underbanked" customers that NetSpend targets. Such people are often lower income, without a traditional bank account.
Total System Services, which calls itself TSYS, said Tuesday that it will pay $16 per share for NetSpend. That's 26 percent above NetSpend's closing price on Monday.
TSYS said expects the acquisition would add to its adjusted per-share profit in the 12 months after it's completed. The deal is still subject to approval by NetSpend shareholders but is expected to close by the middle of the year.
NetSpend's largest shareholder, investment firm JLL Parters, applauded the deal.
NetSpend's CEO Dan Henry will join the TSYS executive team.
Shares of TSYS, based in Columbus, Ga., dipped 9 cents to $23.39 in after-hours trading. Shares of NetSpend Holdings Inc., based in Austin, Texas, jumped 30 percent to $16. Its stock had fallen 40 cents to $12.29 during regular trading.