Wednesday, 8 March 2023
by Berkeley Lovelace
Australia’s leading sub-prime, non-bank lender and second-hand retailer Cash Converters (ASX:CVV) has executed a sale and purchase agreement (SPA) for the acquisition of the UK’s largest franchise group Capital Cash.
The company says it has entered into the SPA to acquire a 100% of the ordinary shares in the company for a total consideration of up to $24.7 million (13.9 million pounds), valuing the business at up to 4.8 times the 2022 financial year earnings before interest, taxes, depreciation and amortisation (EBITDA).
It is reported the business continues to grow ‘strongly’ following a period of ‘significant COVID disruption.
“We are particularly excited to announce an agreement on terms to acquire the largest Cash Converters franchise store network in the UK”
Cash Converters notes that forecast post-COVID growth momentum will continue to drive profitability for the Capital Cash network of stores, which currently stands at 42 franchise stores owned by Capital Cash.
The company also notes this acquisition gives Cash Converters a corporate store footprint in the UK, as well as an experienced management team that will continue to grow the Cash Converters business in the UK.
The acquisition also represents a core part of the company’s previously advised strategy to acquire value accretive franchise store networks, with this acquisition establishing a corporate base to oversee its wider European operation.
With the SPA now signed, Cash Converters announces it looks forward to leveraging the Capital Cash management capability, in order to execute a sensible franchise store acquisition, and greenfield growth strategy.
Speaking on the acquisition, Cash Converters Managing Director Sam Budiselik said: “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.”
Cash Converters is an ASX-listed company which represents Australia’s leading sub-prime, non-bank lender, and second-hand retailer. The company commenced trading in 1984 as a single store in Perth, Western Australia and has since expanded its footprint to over 150 corporate and franchise stories in Australia, 22 corporate and franchise stores in New Zealand, and over 500 franchise stories overseas.