News Column

Blackhawk IPO Brings in $230 Million, Shares Rise

Apr 19 2013 1:02PM

Jeremy C. Owens and George Avalos

stock listings

Blackhawk Network Holdings, the company that provides the gift cards you pick up on a whim at the checkout aisle, is giving its own gift to parent company Safeway: a $230 million IPO and rising stock price on Wall Street.

The Pleasanton-based Safeway spinoff announced Thursday evening that it would sell 10 million shares in an initial public offering at $23 a share, $2 more per share than it expected in its previous filing with the Securities and Exchange Commission earlier this month. When the stock debuted Friday morning on Nasdaq under the ticker symbol HAWK, shares immediately jumped to $25, a gain of 8.7 percent.

Safeway is unloading almost all the shares offered in the IPO, slightly more than 9.8 million of the 10 million, and therefore banking the lion's share of the proceeds. The grocery retailer, also based in Safeway, will continue to be the majority owner of the business it founded in 2001, with its ownership dropping slightly from 95.4 percent to 93.8 percent.

Blackhawk provides a prepaid payment network that uses its in-house technology to offer a broad range of gift cards, other prepaid products and payment services in the United States and 18 other countries. Its specialty is selling gift, phone, sports, ticket, prepaid debit, and prepaid wireless phone cards through a network of more than 100,000 retailers around the world, with parent company Safeway the most prominent for many Californians.

Gas stations operated by San Ramon-based Chevron also sell Blackhawk gift cards, which involve 300 brands of cards from companies such as Barnes & Noble, iTunes, Starbucks, Visa and the NBA. The cards can also be found in other convenience, drug, grocery, and specialty stores, as well as online or at Gift Card Mall racks, which display hundreds of cards that can be redeemed online or on-site at retail locations.

The business has proved lucrative: For all of 2012, Blackhawk earned $48.2 million on operating revenue of $959.1 million. Compared to 2011, profits jumped 31.9 percent and sales climbed 27.6 percent, according to documents Blackhawk filed with the SEC.

Despite the rapid robust sales and profit growth, Blackhawk warned that its success must overcome some significant hazards. One of the chief uncertainties is the ever-shifting strength of the network of distribution partners Blackhawk uses.

"Our operating revenues may decline if we lose one or more of our top distribution partners, fail to maintain existing relationships with our distribution partners or fail to attract new distribution partners to our network," Blackhawk warned in the SEC filing. "If the financial performance of our distribution partners' businesses declines," Blackhawk also could suffer, the company said.

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(c)2013 the Contra Costa Times (Walnut Creek, Calif.)

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Source: Copyright Contra Costa Times (Walnut Creek, CA) 2013