Arlington’s First Cash Financial Services Inc. agreed to buy Cash America International Inc., based in Fort Worth, for about $994 million in stock in a deal that joins two of the largest retail pawn shop operators in the U.S., both headquartered in Tarrant County.
The combined company will take the name FirstCash and will be headquartered in Fort Worth at Cash America’s current building on West Seventh Street.
The deal, announced this morning, calls for First Cash to pay 0.84 of its shares for each Cash America share, the pair said in a statement. The transaction values Cash America at $40.90 a share, near Wednesday’s closing price of $40.70. The pro-forma market value of equity of the transaction is valued at approximately $2.4 billion, based on the current shares outstanding and the closing stock price on April 27, for both companies.
The combined company, to be called FirstCash, with more than 2,000 locations in four countries, will be a giant in the so-called non-bank lending market, which operates pawn shops, check-cashing companies, and payday lenders.
“Both companies have strong brands, broad market presence and teams of talented people, which the combined company will build on to capture the significant upside this partnership creates,” said Dan Feehan, executive chairman of Cash America. “This is an exciting opportunity to re-define leadership in our industry.”
Payday lenders have come under increasing scrutiny in recent years and both companies have focused on the pawn shop business.
The combined company will have operations in four countries, including almost 1,200 stores in the United States, and 936 Latin American locations that will represent 45 percent of FirstCash’s stores. The majority of new store growth is expected to be in Latin American markets, according to the companies. According to a presentation made to investors, there is sufficient Latin American cash flow to fund more than 60 de novo stores per year as well as the infrastructure to make more acquisitions in those markets.
In the new FirstCash, Feehan will serve as non-executive chairman, Rick Wessel, currently chairman and CEO of First Cash, will be vice chairman and CEO and Brent Stuart, Cash America’s current president and CEO, will serve as president and chief operating officer. Doug Orr, executive vice president and chief financial officer of First Cash, will serve as executive vice president and chief financial officer of FirstCash. The combined company’s board of directors will be comprised of seven directors, three of whom will be designated by First Cash, three by Cash America and a former First Cash director endorsed by Cash America.
The deal will add 10 percent to First Cash’s expected earnings next year and 35 percent to Cash America’s, the companies said. The combined company plans to pay an annual cash dividend of 76 cents a share, about 50 percent more than First Cash’s current payout and double Cash America’s, according to a presentation made to investors.
The transaction is expected to close in the second half of 2016, subject to the satisfaction of customary closing conditions, the expiration or termination of the applicable Hart-Scott-Rodino waiting period and approvals by the shareholders of both First Cash and Cash America.
Credit Suisse is serving as lead financial advisor to First Cash and Comstock Capital & Advisory Group, LLC and Pi Capital International LLC also served as financial advisors to First Cash. Alston & Bird LLP is serving as legal counsel to First Cash. Jefferies LLC is serving as exclusive financial advisor to Cash America, and Hunton & Williams LLP is serving as legal counsel to Cash America.