"H&R Block is a classic PE target," said analyst Sandy Mehta at Value Investment Principles Ltd. "There's value there waiting to be unlocked."
H&R Block on April 10 said it struck a deal with San Diego-based BofI Holding Inc. subsidiary BofI Federal Bank on the sale of H&R Block Bank for an undisclosed amount. Kansas City, Mo.-based H&R Block put its banking unit on the block on Oct. 10, 2012.
"Selling the bank definitely makes a takeover [of H&R Block] very plausible," said one industry source who asked to remain unnamed.
"This makes H&R a pure-play business, only adding to the possibility of a takeover," Value Investment's Mehta said.
H&R has an established brand name, a widespread branch network and predictable earnings, all of which makes it "extremely attractive" to PE firms, he asserted.
PE firms such as Omaha-based Berkshire Hathaway Inc. and Chicago-based Thoma Bravo LLC "look for exactly these qualities in the businesses they acquire," Mehta explained.
Berkshire Hathaway and Thoma Bravo officials didn't return calls.
H&R Block doesn't appear to hold the same attractiveness for a strategic buyer, however.
For instance, Intuit (INTU) online tax-preparation service provider, TurboTax.com, H&R's top rival, wouldn't want to purchase the business.
"[H&R Block] is at the other end of the market spectrum," said Morningstar Inc. analyst Andrew Lange, who covers Intuit, which caters to online users while Block specializes in in-person tax preparation.