We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
FirstCash (FCFS) Wraps Up the Buyout of American First
Read MoreHide Full Article
FirstCash Holdings, Inc. (FCFS - Free Report) has completed the previously-announced acquisition of American First Finance, a technology-driven, virtual lease-to-own (LTO) and retail finance provider for underserved, non-prime customers. The cash-and-stock transaction, valued at $916 million (based on the company’s closing stock price on Dec 3, 2021), was announced this October.
American First is the fourth-largest provider of point-of-sale (POS) payment solutions to underserved retail customers in the United States. It serves the target audience via extricate omnichannel strategies, using avant-garde underwriting models and e-commerce competencies.
FirstCash has a proven performance history in retail-based operations, primarily for cash-and-credit constrained consumers. Via this acquisition move, FCFS will become a pioneer in the complementary and burgeoning POS and buy-now-pay-later payment space.
FirstCash will also be able to accommodate feasible payment options to its retail customers in pawn locations that will provide the firm with a new source of revenues. Specifically, American First’s LTO platform will magnify options for customers beyond FirstCash’s current layaway program by permitting them to take home leased merchandise immediately.
The success of the deal acts as a tailwind for FirstCash to leverage on American First’s fully integrated technology platform. FirstCash is well positioned to capitalize on lucrative opportunities in both its current and new product and service categories, via the addition of American First’s data and e-commerce competencies. Moreover, American First will also aid FirstCash in integrating digital payment options for pawn consumers in order to garner better operational efficiency and accelerate inventory turns with higher convenience.
Per the deal terms, the total consideration payable to American First consisted of nearly 8.05 million shares of common stock and $406 million in cash, subject to a net debt adjustment. An additional consideration of $300 million will be payable if American First succeeds in delivering certain performance targets through the first half of 2023.
In December, FirstCash amended a few agreement terms, according to which additional contingent consideration of up to $75 million will be based on the company’s stock performance through Feb 28, 2023. If FirstCash’s highest average stock price for any 10-day period before that date is at or more than $86.25 per share, then no such contingent consideration would be due. The amendment also provided for a fixed $25 million working capital payment payable on Dec 31, 2022 to American First.
To fund part of the acquisition of American First, on Dec 9, 2021, FirstCash upsized its private offering of senior notes to $550 million.
Rick Wessel, FirstCash’s chief executive officer, said, “Together, we are well positioned to drive further expansion and growth in both pawn and the complementary retail point-of-sale payment space and further diversify our revenue opportunities, while serving our customers with a wider set of innovative capabilities.”
At the time of the deal announcement, FirstCash had projected the acquisition to be 15% accretive to adjusted earnings per share in 2022, with further accretion in 2023. Adjusted earnings before interest, taxes, depreciation and amortization accretion was projected to be nearly 30% in 2022.
Our Take
FirstCash has been engaged in a number of strategic acquisitions, supported by a decent balance sheet and liquidity position. In fact, in the first nine months of 2021, it acquired a total of 46 U.S. stores for nearly $77 million. The expansion initiatives are expected to consistently boost profitability and market share as well as help the company diversify its revenues.
Over the past six months, FirstCash stock has declined 20.8% compared with a 5.5% fall recorded by the industry it belongs to.
Several companies from the finance sector are undertaking consolidation efforts to counter the low-interest-rate environment along with heightened costs of investments in technology.
In early December, United Bankshares, Inc. (UBSI - Free Report) announced the completion of its merger deal with Community Bankers Trust Corporation.
The buyout has brought together two high-performing banking companies. It also bolsters United Bankshares’ position as one of the largest and best-performing regional banking companies in the Mid-Atlantic and Southeast. The combined entity will now operate across 250 locations in opportunistic markets in the United States.
First Financial Bancorp. (FFBC - Free Report) agreed to acquire the fourth-largest independent equipment financing platform in the United States, Summit Funding Group. The deal completion, subject to customary closing conditions, is expected in the fourth quarter of this year.
The acquisition of Summit is expected to be accretive to First Financial’s earnings per share by mid-single digits in 2023 (the first-year post-integration). Thereafter, on a run-rate basis, the deal is expected to be accretive to earnings by low-double digits.
U.S. Bancorp’s (USB - Free Report) primary subsidiary U.S. Bank completed the deal to acquire PFM Asset Management LLC. The acquisition was carried out through U.S. Bancorp Asset Management. The deal to acquire PFM Asset Management was announced this July.
U.S. Bancorp’s several acquisitions over the past years have enabled the company to foray into untapped markets and fortify its footprint in existing geographies.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
FirstCash (FCFS) Wraps Up the Buyout of American First
FirstCash Holdings, Inc. (FCFS - Free Report) has completed the previously-announced acquisition of American First Finance, a technology-driven, virtual lease-to-own (LTO) and retail finance provider for underserved, non-prime customers. The cash-and-stock transaction, valued at $916 million (based on the company’s closing stock price on Dec 3, 2021), was announced this October.
American First is the fourth-largest provider of point-of-sale (POS) payment solutions to underserved retail customers in the United States. It serves the target audience via extricate omnichannel strategies, using avant-garde underwriting models and e-commerce competencies.
FirstCash has a proven performance history in retail-based operations, primarily for cash-and-credit constrained consumers. Via this acquisition move, FCFS will become a pioneer in the complementary and burgeoning POS and buy-now-pay-later payment space.
FirstCash will also be able to accommodate feasible payment options to its retail customers in pawn locations that will provide the firm with a new source of revenues. Specifically, American First’s LTO platform will magnify options for customers beyond FirstCash’s current layaway program by permitting them to take home leased merchandise immediately.
The success of the deal acts as a tailwind for FirstCash to leverage on American First’s fully integrated technology platform. FirstCash is well positioned to capitalize on lucrative opportunities in both its current and new product and service categories, via the addition of American First’s data and e-commerce competencies. Moreover, American First will also aid FirstCash in integrating digital payment options for pawn consumers in order to garner better operational efficiency and accelerate inventory turns with higher convenience.
Per the deal terms, the total consideration payable to American First consisted of nearly 8.05 million shares of common stock and $406 million in cash, subject to a net debt adjustment. An additional consideration of $300 million will be payable if American First succeeds in delivering certain performance targets through the first half of 2023.
In December, FirstCash amended a few agreement terms, according to which additional contingent consideration of up to $75 million will be based on the company’s stock performance through Feb 28, 2023. If FirstCash’s highest average stock price for any 10-day period before that date is at or more than $86.25 per share, then no such contingent consideration would be due. The amendment also provided for a fixed $25 million working capital payment payable on Dec 31, 2022 to American First.
To fund part of the acquisition of American First, on Dec 9, 2021, FirstCash upsized its private offering of senior notes to $550 million.
Rick Wessel, FirstCash’s chief executive officer, said, “Together, we are well positioned to drive further expansion and growth in both pawn and the complementary retail point-of-sale payment space and further diversify our revenue opportunities, while serving our customers with a wider set of innovative capabilities.”
At the time of the deal announcement, FirstCash had projected the acquisition to be 15% accretive to adjusted earnings per share in 2022, with further accretion in 2023. Adjusted earnings before interest, taxes, depreciation and amortization accretion was projected to be nearly 30% in 2022.
Our Take
FirstCash has been engaged in a number of strategic acquisitions, supported by a decent balance sheet and liquidity position. In fact, in the first nine months of 2021, it acquired a total of 46 U.S. stores for nearly $77 million. The expansion initiatives are expected to consistently boost profitability and market share as well as help the company diversify its revenues.
Over the past six months, FirstCash stock has declined 20.8% compared with a 5.5% fall recorded by the industry it belongs to.
Currently, FirstCash sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Inorganic Growth Efforts by Other Firms
Several companies from the finance sector are undertaking consolidation efforts to counter the low-interest-rate environment along with heightened costs of investments in technology.
In early December, United Bankshares, Inc. (UBSI - Free Report) announced the completion of its merger deal with Community Bankers Trust Corporation.
The buyout has brought together two high-performing banking companies. It also bolsters United Bankshares’ position as one of the largest and best-performing regional banking companies in the Mid-Atlantic and Southeast. The combined entity will now operate across 250 locations in opportunistic markets in the United States.
First Financial Bancorp. (FFBC - Free Report) agreed to acquire the fourth-largest independent equipment financing platform in the United States, Summit Funding Group. The deal completion, subject to customary closing conditions, is expected in the fourth quarter of this year.
The acquisition of Summit is expected to be accretive to First Financial’s earnings per share by mid-single digits in 2023 (the first-year post-integration). Thereafter, on a run-rate basis, the deal is expected to be accretive to earnings by low-double digits.
U.S. Bancorp’s (USB - Free Report) primary subsidiary U.S. Bank completed the deal to acquire PFM Asset Management LLC. The acquisition was carried out through U.S. Bancorp Asset Management. The deal to acquire PFM Asset Management was announced this July.
U.S. Bancorp’s several acquisitions over the past years have enabled the company to foray into untapped markets and fortify its footprint in existing geographies.