Monday, before the bell, Cash America International Inc. (CSH), a provider of credit services, said it signed a letter of intent to acquire an 80% ownership interest in a 100-store chain of pawnshops, branded as Prenda Fácil, in Mexico.
Cash America stated that financial consideration for the purchase is anticipated to include an initial payment of about $90 million in cash, with a supplemental payment based on future performance after two and one-half years.
Furthermore, Cash America said it expects the transaction to be immediately accretive following the closing of the acquisition, with the benefits expected to add to its 2009 results, and the closing of the transaction is expected to complete late in the fourth quarter of 2008.
As per the acquisition terms, Cash America will own 80% of Prenda Fácil after closing with the two current owners/management retaining the residual 20% interest.
Commenting on the transaction with Prenda Fácil, Dan Feehan, President and Chief Executive Officer of Cash America International, said, "This transaction also enhances our concentration of assets and revenue in our core pawn lending business."
In other news, Cash America said it expects that changes announced by the Department of Banking in Pennsylvania related to its online offering of cash advance products would likely lead to the discontinuation of the product in that state early in 2009.
Similarly, the State of Minnesota has announced changes in its governance of online cash advance products, which could cause a material change to the economics of the product in that state late in 2008.
The company said, in both cases it is reviewing these changes and related State laws to determine if alternatives exist to continue to offer economically feasible products to customers in those markets.
CSH closed Friday's regular trading session at $37.99.
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