Second hand pawn broker and consumer lending platform Cash Converters International [ASX:CCV] announced the finalising of a Sale and Purchase Agreement (SPA) for the acquisition of its largest franchise group in the UK, Capital Cash Ltd.
The sale will cost Cash Converters ₤13.9 million (approximately $24.7 million) and means it will acquire 100% of the ordinary shares in Capital Cash, giving Cash Converters a corporate store footprint in the UK along with an experienced management team to assist growth in the UK.
On Monday, shares for CCV were worth 23 cents each, the international pawn store and financer having bumped up 4.5% in share price in the past week.
However, CCV’s share price has dropped 2% in the past 12 months:
Source: TradingView
Cash Converters takes full control of UK business, Capital Cash
Finance lending pawn brokers Cash Converters today revealed the intention to acquire its UK division Capital Cash, its largest franchise group based in the UK, by taking 100% of shares in its British cousin for up to £13.9 million ($24.7 million).
Capital Cash is the master franchisor to 188 stores around the UK, 42 of which are franchise stores of Capital Cash.
The UK franchise group has been operating in the UK for 20 years, and Cash Converters believes this will offer them some leverage in increasing its corporate footprint in the UK.
Cash Converters will also gain an experienced management team, supporting the transition of Capital Cash into Cash Converters as a growing business in Britain.
Cash Converters’ Managing Director Sam Budiselik stated:
‘We continue to assess opportunities to invest our capital sensibly, to generate value for our shareholders. We are particularly excited to announce an agreement on terms to acquire the largest Cash Converters franchise store network in the UK and to integrate a proven management team into our corporate operation. I would like to take this opportunity to thank the Capital Cash team for the investment made in establishing our brand in local markets over twenty years, as we now look forward to consolidating and growing a corporate network of stores across the UK.’
Capital Cash had $2.9 million in financial 2022 EBITDA as the company emerged out of the pandemic, putting the deal’s value at around four-times EBITDA.
Cash Converters said it would fund the deal using cash reserves and will be earnings accretive as soon as the acquisition is complete, around mid-2023.
The company also said this acquisition is a core part of previously outlined strategies to acquire value-accreditable franchise store networks, and the announcement today establishes the group’s mission to oversee a wider European operation.
Final settlement remains subject to certain conditions, including regulatory approval by the Financial Conduct Authority in the UK.
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