Inexperienced Dot’s deal for Republic Financial institution & Belief’s tax-refund enterprise has hit a regulatory snag, main the purchaser to name off the acquisition, which in flip has prompted litigation by the vendor.
The acquisition’s unraveling spilled into public view Tuesday in securities filings by the 2 firms.
Inexperienced Dot mentioned in its submitting that it’s now not continuing with the $165 million deal, which the businesses introduced in Could. The pay as you go card issuer “has been unable to acquire” the Federal Reserve’s approval or non-objection to the acquisition, and the deal “is not going to be consummated,” Inexperienced Dot mentioned.
In the meantime, Louisville, Kentucky-based Republic disclosed that it’s suing Inexperienced Dot, alleging breach of contract. The lawsuit, filed in a Delaware court docket, alleges that Inexperienced Dot “didn’t disclose the existence of any regulatory points that might trigger a delay” in closing the deal, Republic mentioned.
Inexperienced Dot executives initially billed the pending acquisition as a novel likelihood to develop its tax refund enterprise. The pay as you go card firm, which is transferring its headquarters from Pasadena, California, to Austin, Texas, entered the tax refund market in 2014 with a $320 million buy of Santa Barbara Tax Merchandise Group, generally known as TPG.
The Republic deal seems to have hit a snag over the summer season. Inexperienced Dot knowledgeable Republic that the Fed had requested for data and that Inexperienced Dot supposed to hunt the central financial institution’s approval for the deal, in response to an Aug. 4 securities submitting by Republic.
On Aug. 3, Inexperienced Dot President and CEO Dan Henry instructed analysts that the Division of Justice had signed off on the acquisition and that the businesses have been working towards closing the deal within the third quarter.
“We admire the help of our regulators on this course of and we’ll maintain you up to date on the transaction as we’re working exhausting to shut as shortly as attainable,” Henry mentioned, in response to a transcript of the corporate’s second-quarter earnings name.
In its submitting Tuesday, Republic mentioned that Inexperienced Dot knowledgeable the vendor that it’s going to not shut on the deal “as a result of undisclosed points with its major regulator.”
Republic mentioned it believes it has met all of the circumstances to which the businesses agreed, including that Fed approval was “not a contractual situation to closing” the deal underneath the businesses’ settlement. The Kentucky financial institution mentioned that its lawsuit seeks to drive Inexperienced Dot to renew the deal.
The Fed declined to remark.
Inexperienced Dot mentioned in a press release to American Banker that it obtained phrase Monday that the acquisition is not going to be transferring ahead.
“Sadly we have been unable to acquire the Federal Reserve’s approval of the proposed acquisition, and because of this, the transaction can’t be accomplished,” the corporate mentioned.
“We’re unable to offer particulars of our correspondence with our regulators, however Inexperienced Dot’s incapacity to obtain approval shouldn’t be considered as reflecting negatively on Republic’s Tax Refund Options enterprise in any approach, nor does it have an effect on our capability to proceed offering prime quality companies to our TPG purchasers.”
“Whereas we’re dissatisfied to obtain this information, this doesn’t change our technique to put money into our tax processing platform enterprise to permit for long-term, sustainable progress,” Inexperienced Dot mentioned.
The $6.2 billion-asset Republic, a unit of Republic Bancorp, has had an extended and generally rocky historical past within the tax enterprise. After a battle with the Federal Deposit Insurance coverage Corp. over its tax refund-anticipation mortgage, which drew criticism from client advocates as expensive and dangerous for shoppers, Republic terminated the product after the 2012 tax season.
Extra lately, Republic has provided tax refund loans by the tax-prep chain Liberty Tax.
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