SYDNEY, AUSTRALIA: Cash Converters International Limited (ASX: CCV) announced the execution of a Sale and Purchase Agreement (SPA) for the acquisition of Capital Cash Ltd for a total consideration of up to ₤13.9 million.
Cash Converters is currently the Master Franchisor to 188 stores in the UK, of which Capital Cash is the largest group of stores, operating 42 franchise stores.
Capital Cash has been operating in the UK for twenty years. This strategic acquisition gives Cash Converters a corporate store footprint in the UK, and an experienced management team who will continue to grow the Cash Converters business in the UK.
The acquisition is a core part of the previously advised strategy to acquire value accretive franchise store networks, with this acquisition establishing a corporate base to oversee our wider European operation.
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.”
Deal Terms
Cash Converters has entered into an SPA to acquire 100% of the ordinary shares in Capital Cash for total consideration of up to ₤13.9m (approximately $24.7m), valuing the business at up to 4.8x FY 2022 EBITDA. It is anticipated that forecast post-COVID growth momentum will continue to drive profitability for the Capital Cash network of stores.
These stores have continued to perform strongly into FY 2023 and there are strong growth prospects across the UK. We now look forward to leveraging the Capital Cash management capability, to execute a sensible franchise store acquisition and greenfield growth strategy.
The purchase price will be funded using the Company’s available cash reserves and will be immediately earnings accretive with the acquisition expected to complete in mid-2023. The final settlement remains subject to certain conditions typical for acquisitions of this nature, including regulatory approval by the Financial Conduct Authority in the UK.
Cash Converters International is Australia’s leading sub-prime, non-bank lender and secondhand retailer. Commencing trade in 1984 as a single store in Perth, Western Australia Cash Converters has since expanded its footprint to over 150 Corporate and Franchise stores in Australia, 22 Corporate and Franchise stores in NZ and over 500 Franchise stores overseas (including 188 franchise stores in the UK where the Company is the Master Franchisor).