Blackhawk Network Holdings Inc. next month will complete its spinoff from parent Safeway Inc., but the two companies will remain close partners because of a deal Blackhawk inked to extend its role as exclusive prepaid and gift card provider to Safeway through 2019. What’s more, as Blackhawk sets out as an independent company, it could get a boost from Safeway’s recently proposed merger with supermarket rival Albertsons. Safeway last week affirmed its intention to complete the Blackhawk spinoff in mid-April and simultaneously the Pleasanton, Calif.-based company disclosed a separate agreement to merge with Boise, Idaho-based Albertsons in a $9.2 billion deal. Blackhawk already supplies prepaid card products to Albertsons, which operates more than 1,000 stores. Safeway and Albertsons together would operate 2,400 stores in 34 U.S. states and the District of Columbia.
If consummated, the supermarket stores’ merger could change Blackhawk’s tax basis and provide significant long-term tax benefits to the gift card giant, Blackhawk said. The merger could trigger a “step-up” in the tax basis of Blackhawk’s assets that could generate a cash tax savings of $30 million per year for Blackhawk, the gift card company said in a March 7 press release.
Blackhawk’s IPO last year raised $230 million, bringing its market value to $1.2 billion. The prepaid provider has operated independently for the past two years, except for sharing tax and treasury management functions, and the long-planned spinoff will not affect day-to-day operations, according to Blackhawk. “Safeway recognized that in order for Blackhawk to build a leading third-party gift card business, Blackhawk would need to operate independently and partner with many grocery retailers that compete with Safeway,” said Blackhawk CEO Bill Tauscher.