Higher One Holdings, Inc. (NYSE: ONE) has agreed to be bought by an affiliate of education technology provider Blackboard Inc. The transaction is valued at $260 million and is expected to close in 3Q2016. But where is the value for ONE shareholders in whole arrangement?
Higher One Holdings, Inc. (NYSE: ONE) managed to negotiate for an all-cash buyout that makes the outcome of the transaction certain by the time it closes. The $260 million total value of the deal values the company at $5.15 per share, which is a premium of 37% over the closing price of ONE on the day immediately before the deal was made public. There lies the value for ONE shareholders and the management feels it has done a great job in hunting the best bargain for shareholders.
The sale of ONE comes after a string of reorganization measures in the company aimed at boosting profitability. The company had earlier sold its refund/disbursement business for $37 million. The operation was acquired by Customers Bancorp Inc.
Divestiture of refunds business
Higher One Holdings, Inc. (NYSE: ONE) sold its refund operation at a time when revenue from the business had begun shrinking. For example, disbursements contributed only $74 million of the gross revenue in 2015, a sharp decline from $128 million in the prior year. But ONE’s payments division has been doing well with sales there rising to $83 million in 2015 from $59 million in 2013.
Higher One Holdings, Inc. (NYSE: ONE) – Focus on payments market
It is the payments business that Blackboard appears to be eying as it seeks to bolster its position in the fees and tuition payment market. Higher One Holdings, Inc (NYSE:ONE)’s payment solutions are used by some 700 campuses in the U.S. and that should lead to a significant boost to Blackboard’s customer base in the fees payment market. Blackboard is expected to integrate ONE’s payment system with its own called Blackboard Transact as well as CASHNet, a technology that it also acquired.