Blackhawk Network to acquire Grass Roots Group

31 August, 2016


United Kingdom-based provider of employee engagement and customer engagement services will expand Blackhawk's growing incentives business portfolio

PLEASANTON, Calif.  — Blackhawk Network Holdings, Inc., a leading prepaid and payments network ("Blackhawk"), announced today that it has entered into a definitive agreement to acquire Grass Roots Group Holdings Ltd. (Grass Roots), a leading provider of employee and customer engagement solutions. The closing of the transaction is subject to completion of certain filings with and approval by Germany's Bundeskartellamt (Federal Cartel Office or "FCO"). Grass Roots is headquartered in the county of Hertfordshire, United Kingdom, with offices in Europe, the Americas and Asia. The acquisition will broaden the global capabilities of Blackhawk's incentives and engagement business.

"The acquisition of Grass Roots complements the existing client portfolio of Blackhawk's incentives business, and enhances solutions for customers requiring global reward and incentive platforms and products," said Bill Tauscher, executive chairman for Blackhawk. "We will also offer new products and capabilities to Grass Roots' clients."

In 2014, Blackhawk launched Blackhawk Engagement Solutions ("BES"), a leading global provider of customized incentive and engagement solutions for consumer promotions, employee recognition and rewards, and indirect sales channels. BES was formed following Blackhawk's acquisitions of incentives and rewards providers Parago, InteliSpend, CardLab and Incentec. In addition, since June of 2015, Blackhawk has made several additional acquisitions that have further expanded its incentives business, including:

Achievers, a leading provider of employee recognition and rewards solutions designed to help companies increase employee engagement and drive business performance. The Grass Roots offering will complement the Achievers enterprise software-as-a-service solution;
Giftcards.com and OmniCard, a provider of digital and physical prepaid gift card solutions and customized prepaid incentive and reward solutions;
And Extrameasures, a prepaid consumer promotions and incentives company.

"The Grass Roots team has extensive industry experience and a proven track record of success in the consumer and employee engagement markets. We are thrilled to welcome them and over 2,000 managed service clients to the Blackhawk family," added Talbott Roche, CEO and president of Blackhawk.

"We are excited to be a part of Blackhawk," said Richard Bandell, CEO of Grass Roots. "Joining Grass Roots with Blackhawk and its industry-leading incentive solutions and prepaid product capabilities allows us to enjoy new scale and scope advantages. We are confident that our customers and partners will benefit greatly from the partnership."

Grass Roots will operate as a subsidiary of Blackhawk. Matthew Howe and Jonathan Kenny, co-managing directors of Blackhawk's UK-based Europe operations, will lead the European operations of Grass Roots. Stewart Rigby, managing director, Blackhawk Asia Pacific, will lead the Asia-Pacific operations of Grass Roots.


About the Acquisition
Blackhawk is acquiring the Grass Roots Group for approximately £90 million (US$118 million assuming the current pound to dollar exchange rate) in cash, using a combination of cash-on-hand and borrowings under an existing revolving credit facility. The transaction is subject to approval by the FCO which is expected within the next 30 to 120 days. The acquired Grass Roots Group entities are forecasting Adjusted EBITDA of approximately £11 million for full calendar year 2016.

The current Grass Roots shareholders comprise WPP plc and current and former management, all of whom are selling their shares in this transaction.

About Blackhawk Network

Blackhawk Network Holdings, Inc. (NASDAQ: HAWK) is a leading prepaid and payments global company, which supports the program management and distribution of gift cards, prepaid telecom products and financial service products in retail, digital and incentive channels. Blackhawk's digital platform supports prepaid across a network of digital distribution partners including retailers, financial service providers, and mobile wallets. For more information, please visit www.blackhawknetwork.com.

About Grass Roots

Passionate about inspiring people, the Grass Roots Group connects brands and people, through services such as Experience and Insight, Motivation, Rewards, Benefits, Promotions and Meetings and Events. Founded in the UK in 1980, the Group has 12 offices throughout the world and has provided services in over 100 countries. Grass Roots Group companies have over 20,000 total clients, including one-third of the Financial Times Stock Exchange 100.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements are indicated by words or phrases such as "guidance," "believes," "expects," "anticipates," "estimates," "plans," "continuing," "ongoing," and similar words or phrases and the negative of such words and phrases. Forward-looking statements are based on our current plans and expectations and involve risks and uncertainties which are, in many instances, beyond our control, and which could cause actual results to differ materially from those included in or contemplated or implied by the forward-looking statements. Such risks and uncertainties include, among other things, Blackhawk's ability to successfully integrate the acquired business and products; costs related to the acquisition; the competitive environment in the industry and competitive response to the acquisition; general market and business conditions; and the accounting impact of the acquisition.

Other risks and uncertainties relating to the Company's business are: our ability to grow adjusted operating revenues and adjusted net income as anticipated, our ability to grow at historic rates or at all, the consequences should we lose one or more of our top distribution partners or fail to attract new distribution partners to our network or if the financial performance of our distribution partners' businesses decline, our reliance on our content providers, the demand for their products and our exclusivity arrangements with them, our reliance on relationships with card issuing banks, the consequences to our future growth if our distribution partners fail to actively and effectively promote our products and services, the ability of our distribution partners to implement EMV compliance within their expected timeline and lift the measures they may have taken prior to such compliance to limit or control their exposure to liability for fraud losses; changes in consumer behavior away from our distribution partners and our products resulting from limits or controls implemented by our distribution partners during our distribution partners' transition to EMV compliance; the requirement that we comply with applicable laws and regulations, including increasingly stringent money-laundering rules and regulations, and other risks and uncertainties described in our reports and filings with the Securities and Exchange Commission (the "SEC"), including the risks and uncertainties set forth in Item 1A under the heading Risk Factors in our Annual Report on Form 10-K for the year ended January 2, 2016 and other subsequent periodic reports we file with the SEC. We undertake no obligation to update forward-looking statements to reflect developments or information obtained after the date hereof and disclaim any obligation to do so other than as may be required by law.

CONTACT
Courtney Brunkow
Courtney@fletchergroupllc.com
+1 303-717-9575

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