H&R Block deal targets weakness in digital market

Block said it agreed to pay $287.5 million for the developer of TaxACT, which more than 5 million tax filers used last season.

TaxACT’s management team led by Lance Dunn will lead a combined digital tax business that would offer both the TaxACT and H&R Block At Home brands.

In the deal, Block will pay cash for 2SS Holdings Inc., a Cedar Rapids, Iowa-based company with 70 employees. It’s TaxACT brand offers online, desktop download and professional software tax preparation services.

“This transaction is a significant step for H&R Block in a segment that is strategically important. This will provide us with innovative growth-oriented leadership to accelerate our digital tax offerings and results,” Block CEO Alan Bennett said in the announcement.

Block’s management has targeted its loss of tax customers and particularly its weak showing in the digital tax market.

At the company's shareholders meeting two weeks ago, Bennett said Block's online product would get an upgrade because it was complicated and difficult to navigate.

Management will discuss the TaxACT deal during a conference call at 8 a.m. Thursday. To listen, call 877-247-6355 and use conference number 10673363.

The announcement said the deal would boost Block’s earnings per share by 5 cents, assuming the purchase is completed by the end of December.