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Notable Mergers and Acquisitions of the Day 9/18: (GDOT) (WWAV) (EMKR)
September, 19th 2014

Green Dot (NYSE: GDOT) announced that it has entered into a definitive agreement to acquire Santa Barbara Tax Products Group (“TPG”) for approximately $320 million in cash and stock plus potential additional contingent consideration. Green Dot Corporation ("Green Dot or the "Company") and its wholly-owned subsidiary bank, Green Dot Bank, are focused exclusively on serving Low and Moderate Income (LMI) American families with modern, fair and feature-rich financial products and services, including prepaid cards, checking accounts and cash processing services distributed through a network of some 95,000 retail stores, neighborhood financial service centers, and via digital channels. Following the closing, the acquisition will greatly expand Green Dot’s reach into its core customer segment by adding tax refund processing services for millions of tax filers through distribution partnerships with many of America’s largest and best known tax preparation companies and thousands of independent tax preparers.
“We believe TPG is a great acquisition for our investors and the customers and business partners of both entities,” said Steve Streit, Founder, Chairman and Chief Executive Officer, Green Dot Corporation. “From a financial perspective, we expect the transaction to generate mid-teens percentage accretion to 2015 non-GAAP earnings per share1. Furthermore, the transaction is expected to expand Green Dot’s margins thereby enabling Green Dot to generate higher and more diversified earnings. Additionally, TPG’s robust cash flow model is expected to augment Green Dot’s already strong annual cash flows.”

Mr. Streit continued, “In addition to the expected economic benefits, we believe this acquisition is strategically compelling. The segment of consumers who utilize TPG’s services are highly correlated to Green Dot’s customer segment of LMI American families. As a point of reference, more than 50% of all tax refunds loaded to Green Dot’s prepaid cards in the most recent tax season were processed by TPG. Furthermore, in the same period, we believe the majority of tax refund dollars loaded to all prepaid cards industry-wide were processed through TPG. Given the strong correlation between customer segments, we believe that, over time, there is a significant revenue opportunity in bundling Green Dot’s award winning prepaid cards and checking accounts along with TPG’s industry leading consumer tax refund processing services.”

“TPG is known for treating its partners, customers and industry stakeholders with dedication, transparency, integrity and a mission to provide highly valuable and highly trusted processing and settlement services to the tax industry. Green Dot is the perfect match for our business since it too shares a mission of dedication and integrity towards its customers and business partners. Furthermore, we believe Green Dot’s industry-leading product suite, its award-winning technology capabilities, its strong financial resources, and its well-known and trusted national brand name will likely provide meaningful growth and long-term sustainability for our partners and for our business,” said Rich Turner, Founder and Executive Chairman, TPG.

TPG - America’s Largest Consumer Tax Refund Transaction Processor

TPG is integrated as the tax refund processing and settlement engine for 4 out of the 6 leading consumer online and in-person tax preparation companies. Additionally, TPG’s services are integrated into the offerings of the nation’s leading tax software companies, which, together, enable TPG to serve nearly 25,000 independent tax preparers and accountants nationwide. In the most recent tax season, TPG processed approximately $32 billion in tax refunds on behalf of approximately 11 million U.S. tax filers. For the fiscal year ended June 30, 2014, TPG generated approximately $45 million of EBITDA.

Transaction Details

Green Dot has entered into a definitive agreement to acquire TPG for a closing purchase price of approximately $320 million in cash and stock. Green Dot expects to generate approximately $85 million of tax benefits from the transaction, bringing the net transaction value to approximately $235 million-or 5.2 times TPG’s FY 2014 EBITDA. Additionally, the transaction terms include a potential $80 million cash earn-out payable to TPG investors based on TPG meeting certain pre-determined performance targets over the next three years. Green Dot expects to fund the transaction with $55 million in cash from its balance sheet, $150 million in new bank debt, and approximately 6.133 million shares of Green Dot class A common stock. Post-closing, TPG investors will own, in the aggregate, approximately 10.5% of the fully diluted shares of the combined entity.

Green Dot provides annual guidance during its Q4 earnings call, typically held within the first two months of each calendar year. Accordingly, Green Dot will not be providing consolidated 2015 guidance until next year. However, for illustrative purposes only, based on 2015 Thomson Reuters First Call consensus estimates for Green Dot and without directly or indirectly endorsing or concurring with such forecasts, the transaction is expected to generate mid-teens percentage accretion to non-GAAP diluted earnings per share in 2015. The acquisition is expected to close within sixty days, subject to customary closing conditions. Additional details, including the financial impact to Green Dot’s full-year financial results and a revised full year outlook, may be found in a separate press release issued by Green Dot on September 18, 2014.

BofA Merrill Lynch acted as financial advisor to Green Dot and Gibson Dunn & Crutcher LLP provided legal counsel. William Blair acted as financial advisor for TPG and Willkie Farr & Gallagher provided legal counsel.

1 Based on 2015 Thomson Reuters First Call consensus estimates. Please note that any projections of the Company's performance relative to First Call consensus estimates in this press release are for illustrative purposes only. Forecasts regarding the Company's performance made by analysts within the First Call consensus group are theirs alone and do not represent forecasts or predictions of the Company or its management. Green Dot does not by its reference to First Call consensus estimates imply its endorsement of or concurrence with such forecasts.

* WhiteWave Foods (NYSE: WWAV) announced that it has agreed to acquire So Delicious Dairy Free ("So Delicious") from its existing shareholders, led by Wasserstein & Co., for approximately $195 million in cash.

Best known by consumers for its plant-based beverages, creamers, cultured products and frozen desserts under the So Delicious® Dairy Free brand, So Delicious was founded in 1987 by Mark Brawerman, who was CEO until 2013. Based in Eugene, Ore., So Delicious’ products are 100% plant-based and its entire product offering is non-GMO verified.

So Delicious had net sales of $115 million for the twelve months ended June 30, 2014 and is expected to experience continued strong growth in the second half of 2014. The company has a proven track record of growth and innovation and is strongly associated with organic and non-GMO integrity, nutritious products, environmental stewardship and sustainable agricultural practices.

“The acquisition of So Delicious represents a great addition to the WhiteWave portfolio and fits squarely within our strategy of driving growth in our core businesses,” said Gregg Engles, Chairman and Chief Executive Officer of WhiteWave. “So Delicious is an outstanding company and a unique player in the plant-based food and beverage arena, with consumers seeking out the brand for a broad range of great-tasting, dairy-free beverages, creamers and cultured products. So Delicious is also recognized as the #1 plant-based frozen dessert brand in the United States, and it will provide WhiteWave entry into the growing, plant-based frozen dessert category.”

Engles continued, “At the same time, So Delicious will provide additional growth opportunities in the dynamic plant-based food and beverage space. It builds on our platform of Silk and Alpro branded products by expanding plant-based capabilities and providing new category opportunities. Furthermore, in addition to compelling growth and product expansion potential, the extension of the So Delicious business across WhiteWave’s existing business platform, capabilities and infrastructure, is also expected to provide significant cost savings opportunities. Simply stated, we believe this is a compelling acquisition that will add a highly complementary brand to WhiteWave’s product portfolio and position us to drive additional shareholder value.”

"Joining the WhiteWave organization will enable us to continue to build on our commitment to bringing dairy-free joy to even more households," said Chuck Marcy, Chief Executive Officer of So Delicious Dairy Free. "For over 25 years, So Delicious has been dedicated to making delicious and responsible, 100% plant-based, non-GMO foods and beverages. WhiteWave shares our passion for uncompromising commitment to non-GMO integrity, environmental stewardship and sustainability. This combination will give us an opportunity to grow our portfolio of dairy-free solutions, and introduce the benefits of dairy-free living to more families.”

Rothschild Inc. acted as financial advisor and Haynes & Boone, LLP and Dechert LLP acted as legal advisors to WhiteWave. Sawaya Segalas & Co., LLC acted as financial advisor to So Delicious and provided a fairness opinion. Crowell & Moring LLP and Loeb & Loeb LLP acted as legal advisors to So Delicious. First Beverage Advisors, LLC also acted as financial advisor to So Delicious.

The deal is expected to close in the next few months, subject to customary closing conditions. WhiteWave intends to fund the acquisition through cash balances and available credit. The transaction is expected to be accretive to WhiteWave’s earnings in the first 12 months following closing, excluding certain transaction and integration expenses.

* EMCORE Corporation (Nasdaq: EMKR) announced that it has entered into a definitive agreement with an affiliate of private equity firm Veritas Capital, under which an affiliate of Veritas has agreed to purchase EMCORE's Space Photovoltaics business for $150 million in cash. The transaction is subject to approval by EMCORE's shareholders and other customary closing conditions and is currently expected to close in December 2014 or January 2015. The transaction is not subject to a financing condition.

In connection with this transaction, an affiliate of Veritas has entered into a voting agreement with certain shareholders of EMCORE, including certain directors and officers of the Company, that control in the aggregate approximately 11% of the voting power of the company, under which they have agreed to vote their shares in favor of the transaction.

EMCORE's Space Photovoltaics business was founded in 1998 and is based in Albuquerque, NM. The business provides products for space power applications including high-efficiency multi-junction solar cells, coverglass interconnected cells and complete satellite solar panels, along with terrestrial applications, including high-efficiency multi-junction solar cells for concentrating photovoltaic power systems.

"Veritas Capital is excited to be associated with EMCORE's Space Photovoltaics business. The management and employees at EMCORE have an established history of providing leading technology and reliable products to the worldwide satellite industry. We look forward to continuing this excellent track record under our ownership and to working with the Space Photovoltaics team to expand the business," said Benjamin Polk, Partner of Veritas Capital.

"Veritas' proven track record of fostering growth in high-technology and defense industry companies makes it an excellent fit for EMCORE's Space Photovoltaics business. EMCORE's Board of Directors and management team believe this transaction will benefit our satellite customers while providing considerable value to our shareholders," said Dr. Hong Hou, President and CEO of EMCORE Corporation. "We are very excited to see our team in the Space Photovoltaics business partner with Veritas for the next stage of their growth. Veritas' industry expertise and financial resources will enable the business to continue to provide its customers with the reliable, high-performance products and best-in-class customer service that they have come to expect, while also representing a platform from which to grow the business."

Transaction Details

An affiliate of Veritas Capital and EMCORE have entered into a definitive purchase agreement for the purchase of EMCORE's Space Photovoltaics business for $150 million in cash (subject to working capital adjustments) and the assumption of certain liabilities
The assets to be sold comprise substantially all of EMCORE's Photovoltaics reporting segment, as well as all rights to the buildings owned, and includes approximately 275 employees in Albuquerque, NM
The Space Photovoltaics business Fiscal 2013 revenue was $70.5 million
The transaction is subject to a vote of EMCORE's shareholders and is expected to close in December 2014 or January 2015.

Raymond James & Associates, Inc. acted as exclusive financial advisor to EMCORE. Skadden, Arps, Slate, Meagher & Flom LLP acted as legal advisor to the company. Schulte Roth & Zabel LLP acted as legal advisor to Veritas, with Covington & Burling LLP providing certain regulatory advice to Veritas.

Tax Benefits Preservation Plan

Also, EMCORE's Board of Directors has adopted a Tax Benefits Preservation Plan (the "Rights Plan") to help preserve the value of the net operating losses by reducing the risk of limitation of net operating loss carryforwards and certain other tax benefits under Section 382 of the Internal Revenue Code (the "Tax Benefits"). The value of the Tax Benefits could be reduced if EMCORE experiences an "ownership change" under U.S. federal income tax rules, which occurs if one or more "5% shareholders" (as defined under U.S. federal income tax laws) have aggregate increases of 50% in their EMCORE ownership over a three year historic period. The Rights Plan reduces the likelihood that EMCORE will experience such an ownership change by discouraging any person or group from becoming a "5% shareholder" or increasing their EMCORE ownership if they already are a "5% shareholder." In connection with the Rights Plan, EMCORE has declared a dividend of one right for each share of common stock outstanding as of the close of business on October 3, 2014.

Details of the Rights Plan will be filed with the SEC in a Form 8-K that will be accessible in the Investor Relations section of EMCORE's website and in the EDGAR section of the SEC's website at
Strategic Alternatives

In December 2013, the Board of Directors formed a Strategy and Alternatives Committee, which consists of Steven Becker (Chairman), Stephen Domenik and James Tegnelia. The Strategy and Alternatives Committee retained Raymond James as advisor. Over the past nine months, this committee has been working diligently to review a broad spectrum of alternatives. The announced sale of the Space Photovoltaics business to Veritas is the first major action resulting from the review of strategic alternatives. The Strategy and Alternatives Committee and the entire Board continue to work closely with Raymond James in reviewing a wide variety of alternatives to increase shareholder value. In addition, the Board views the Tax Benefits as a significant asset of the Company and today's announcement of the Rights Plan indicates the Board's intention to take steps to preserve that asset.

The management team has undertaken a thorough review of the remaining operations and has implemented significant cost reduction measures. The Company has seen an improvement in the financial performance and the market conditions in our Fiber Optics business. In conjunction with the divestiture of the Space Photovoltaics business, the Company will continue to review and implement various initiatives to further reduce the cost structure. The Board believes that the remaining business can achieve EBITDA break-even, excluding stock compensation, amortization, accretion and other items, by September 2015. The management will discuss its plan further with investors during its next earnings conference call.

 
 
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