Capital One Financial Corp. on Monday backed out of plans to acquire NetSpend Holdings Inc., but said it will buy a minority stake in the prepaid debit card provider for undisclosed terms.
Captial One spokeswoman Tatiana Stead declined to provide details on the size or cost of the stake when reached by Associated Press. A NetSpend spokeswoman also declined to comment. In a statement, Capital One said the companies "mutually agreed" to end their $700 million deal, which was announced in August and was expected to close by the end of the year.
The companies instead have agreed to a letter of intent in which Capital One will acquire a minority interest in NetSpend and get a seat on the Austin, Texas-based company's board. The companies plan to work together to sell prepaid debit cards in mainstream U.S. stores.
"Through continued discussions, we jointly determined both companies would be best served by restructuring and expanding our existing relationship," Stead said. Capital One said it does not expect its minority stake in the company to have a material effect on earnings per share next year.
