Combined Company to Have Experienced Management
Team and a Strong Platform for Growth and Value Creation
Financial Strength to Enhance Ability to Expand
in Growing Latin American Market and to Support Capital Returns to
Shareholders
Combined Company Expected to Pay Annual Cash
Dividend of $0.76 Per Share
Transaction Expected to Be Significantly
Accretive to Free Cash Flow and Earnings Per Share
Increased Scale Expected to Result in $50
Million in Annual Run-Rate Synergies
First Cash and Cash America to Host Joint
Conference Call and Webcast at 8:00 a.m. ET Today
First Cash Financial Services, Inc. (NASDAQ: FCFS), a leading
international operator of retail pawn stores in Latin America and
the United States, and Cash America International, Inc. (NYSE:
CSH), a leading operator of retail pawn stores in the United
States, today announced that they have entered into a definitive
merger agreement under which the two companies will combine in a
tax free, all-stock transaction. 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, 2016 for both companies.
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The combined company, to be named FirstCash, will have one of
the largest retail pawn store footprints in Latin America and the
United States, with over 2,000 locations across four countries. The
robust cash flows and financial strength of the merged companies
will allow for greater capital returns to shareholders in the form
of increased cash dividends and further stock buybacks as well as
for continued expansion in Latin America.
“This is a transformational combination that creates compelling
growth and value creation opportunities for both companies’
stakeholders,” said Rick Wessel, Chairman and Chief Executive
Officer of First Cash. “The increased scale resulting from this
combination will enable us to serve more consumers in more markets
than ever before. We will also benefit from significant run-rate
synergies and robust cash flows that will enhance our ability to
pursue expansion plans in the Latin American region, which we
expect to be our primary store growth vehicle,” Wessel
concluded.
“In addition to combining two complementary businesses, our
merger with First Cash brings together two organizations with a
shared commitment to providing attractive products, services and
solutions for under-banked and value-conscious consumers,” said
Brent Stuart, Cash America President and Chief Executive Officer.
“All of us at Cash America are thrilled to partner with First Cash
as we enter into this new chapter for our company that we believe
will drive value for our shareholders and the customers we serve,”
Stuart concluded.
Dan Feehan, Executive Chairman of Cash America, said, “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. This is an
exciting opportunity to re-define leadership in our industry.”
FirstCash: A Strong Platform with Experienced Management;
Well Positioned for Growth and Value Creation
- Proven Leadership Team:
FirstCash will be led by a proven leadership team that reflects the
strengths and capabilities of both companies, including a
successful integration track record involving nearly 450 store
acquisitions since 2013. Mr. Feehan will serve as Non-Executive
Chairman, Mr. Wessel as Vice Chairman and Chief Executive Officer,
and Mr. Stuart 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.
- Scale and Geographic Reach: 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% of FirstCash’s stores. The
majority of new store growth is expected to be in Latin American
markets. On a pro forma basis, FirstCash would have first quarter
2016 LTM revenues of approximately $1.75 billion. Pawn operations
will continue to be the primary focus of the combined company, with
94% of the combined company’s expected revenue mix coming from
pawn-related merchandise sales and pawn service fees.
- Significant Run-Rate Synergies:
The increased scale afforded by the combination is expected to
generate approximately $50 million of annual run-rate synergies
within the first 24 months after the closing of the transaction,
primarily from efficiencies related to technology platforms,
finance and reporting functions, and other administrative
functions.
- Significantly Accretive to
Earnings: Looking at standalone expectations, the transaction
would be 10% accretive to First Cash’s expected earnings per share
in 2017 and 35% accretive to Cash America’s expected 2017 earnings
per share.
- Capital Returns to Shareholders:
FirstCash intends to return capital to shareholders via quarterly
cash dividend payments and stock buybacks. While subject to the
approval of the combined company’s board of directors, it is
expected that the new company will pay an annual cash dividend of
$0.76 per share, paid quarterly, which is approximately 50% greater
than First Cash’s current dividend policy and approximately 100%
greater than Cash America’s current dividend policy.
- Strong Cash Flow and Financial
Flexibility: The combined company’s pro forma robust cash flows
and balance sheet provide the financial strength to support
continued expansion into Latin American markets in addition to a
return of capital to shareholders through cash dividends and
buybacks. FirstCash’s strong credit profile is expected to lead to
lower long-term financing costs.
Terms and Additional Details
Under the terms of the agreement, which was unanimously approved
by the boards of directors of both companies, Cash America
shareholders will receive a fixed exchange ratio of 0.84 First Cash
shares for each Cash America share they own. Following the close of
the transaction, First Cash shareholders will own approximately 58%
of the combined company, and Cash America shareholders will own
approximately 42%.
Following the closing of the transaction, FirstCash will be
headquartered in Fort Worth, Texas.
Pending completion of the transaction, both companies expect to
continue to pay quarterly cash dividends under each company’s
existing dividend policy and respective stock repurchase programs
will be suspended.
Approvals
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.
Advisors
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.
Conference Call and Webcast
First Cash and Cash America will host a joint conference call
and webcast today, April 28, at 8:00 a.m. ET (7:00 a.m. CT) to
discuss the merger transaction as well as both companies’ first
quarter 2016 financial results, which were separately announced
today.
The dial-in number is (212) 231-2930. Participants should dial
in 10 minutes prior to the scheduled start time.
A link to the live Webcast of the conference call will be
available on the investor relations section of each company’s
websites at www.cashamerica.com and www.firstcash.com.
A link to the webcast replay will be available shortly after the
call concludes on the companies’ investor relations websites. A
replay may also be accessed for 72 hours by dialing toll-free:
(800) 633-8284 or +1-402-977-9140 for international callers. The
replay confirmation code is 21776991.
About First Cash
With over 1,270 retail and consumer lending locations in the
U.S., Mexico, Guatemala and El Salvador, First Cash Financial
Services, Inc. is a leading international operator of pawn stores.
First Cash focuses on serving cash and credit constrained consumers
through its retail pawn locations, which buy and sell a wide
variety of jewelry, consumer electronics, power tools, household
appliances, sporting goods, musical instruments and other
merchandise, and make small consumer pawn loans secured by pledged
personal property. Approximately 97% of the Company’s revenues are
from pawn operations.
First Cash is a component company in both the Standard &
Poor’s SmallCap 600 Index® and the Russell 2000
Index®. First Cash’s common stock (ticker symbol
“FCFS”) is traded on the NASDAQ Global Select Market,
which has the highest initial listing standards of any stock
exchange in the world based on financial and liquidity
requirements.
About Cash America
As of March 31, 2016, Cash America International, Inc. operated
892 total locations in the United States offering pawn lending and
related services to consumers, which included the following:
- 819 lending locations in 20 states in
the United States primarily under the names “Cash America Pawn,”
“SuperPawn,” “Cash America Payday Advance,” and “Cashland;”
and
- 73 check cashing centers (all of which
are unconsolidated franchised check cashing centers) operating in
12 states in the United States under the name “Mr. Payroll.”
For additional information regarding Cash America and the
services it provides, visit the Company’s website located at:
http://www.cashamerica.com or download the Cash America mobile app
without cost from the App Store℠ and on Google Play™.
App Store is a service mark of Apple Inc. and Google Play is a
trademark of Google Inc.
Forward Looking Statements
This communication contains “forward-looking statements” (as
defined in the Securities Litigation Reform Act of 1995) regarding,
among other things, future events or the future financial
performance of First Cash and Cash America. Words such as
“anticipate,” “expect,” “project,” “intend,” “believe,” “will,”
“estimates,” “may,” “could,” “should” and words and terms of
similar substance used in connection with any discussion of future
plans, actions or events identify forward-looking statements. The
closing of the proposed transaction is subject to the approval of
the stockholders of First Cash and Cash America, regulatory
approvals and other customary closing conditions. There is no
assurance that such conditions will be met or that the proposed
transaction will be consummated within the expected time frame, or
at all. Forward-looking statements relating to the proposed
transaction include, but are not limited to: statements about the
benefits of the proposed transaction, including anticipated
synergies and cost savings and future financial and operating
results; future capital returns to stockholders of the combined
company; First Cash’s and Cash America’s plans, objectives,
expectations, projections and intentions; the expected timing of
completion of the proposed transaction; and other statements
relating to the transaction that are not historical facts.
Forward-looking statements are based on information currently
available to First Cash and Cash America and involve estimates,
expectations and projections. Investors are cautioned that all such
forward-looking statements are subject to risks and uncertainties,
and important factors could cause actual events or results to
differ materially from those indicated by such forward-looking
statements. With respect to the proposed transaction, these risks,
uncertainties and factors include, but are not limited to: the risk
that First Cash or Cash America may be unable to obtain
governmental and regulatory approvals required for the transaction,
or that required governmental and regulatory approvals may delay
the transaction or result in the imposition of conditions that
could reduce the anticipated benefits from the proposed transaction
or cause the parties to abandon the proposed transaction; the risk
that required stockholder approvals may not be obtained; the risks
that condition(s) to closing of the transaction may not be
satisfied; the length of time necessary to consummate the proposed
transaction, which may be longer than anticipated for various
reasons; the risk that the businesses will not be integrated
successfully; the risk that the cost savings, synergies and growth
from the proposed transaction may not be fully realized or may take
longer to realize than expected; the diversion of management time
on transaction-related issues; the risk that costs associated with
the integration of the businesses are higher than anticipated; and
litigation risks related to the transaction. With respect to the
businesses of First Cash and/or Cash America, including if the
proposed transaction is consummated, these risks, uncertainties and
factors include, but are not limited to: the effect of future
regulatory or legislative actions on the companies or the
industries in which they operate and the effect of compliance with
enforcement actions, orders or agreements issued by applicable
regulators; the risk that the credit ratings of the combined
company or its subsidiaries may be different from what the
companies expect and/or risks related to the ability to obtain
financing; economic and foreign exchange rate volatility,
particularly in Latin American markets; adverse gold market or
exchange rate fluctuations; increased competition from banks,
credit unions, internet-based lenders, other short-term consumer
lenders and other entities offering similar financial services as
well as retail businesses that offer products and services offered
by First Cash and Cash America; decrease in demand for First Cash’s
or Cash America’s products and services; public perception of First
Cash’s and Cash America’s business and business practices; changes
in the general economic environment, or social or political
conditions, that could affect the businesses; the potential impact
of the announcement or consummation of the proposed transaction on
relationships with customers, suppliers, competitors, management
and other employees; risks related to any current or future
litigation proceedings; the ability to attract new customers and
retain existing customers in the manner anticipated; the ability to
hire and retain key personnel; reliance on and integration of
information technology systems; ability to protect intellectual
property rights; impact of security breaches, cyber-attacks or
fraudulent activity on First Cash’s or Cash America’s reputation;
the risks associated with assumptions the parties make in
connection with the parties’ critical accounting estimates and
legal proceedings; and the potential of international unrest,
economic downturn or effects of currencies, tax assessments or tax
positions taken, risks related to goodwill and other intangible
asset impairment, tax adjustments, anticipated tax rates, benefit
or retirement plan costs, or other regulatory compliance costs.
Additional information concerning other risk factors is also
contained in First Cash’s and Cash America’s most recently filed
Annual Reports on Form 10-K, subsequent Quarterly Reports on Form
10-Q, Current Reports on Form 8-K, and other Securities and
Exchange Commission (“SEC”) filings.
Many of these risks, uncertainties and assumptions are beyond
First Cash’s or Cash America’s ability to control or predict.
Because of these risks, uncertainties and assumptions, you should
not place undue reliance on these forward-looking statements.
Furthermore, forward-looking statements speak only as of the
information currently available to the parties on the date they are
made, and neither First Cash nor Cash America undertakes any
obligation to update publicly or revise any forward-looking
statements to reflect events or circumstances that may arise after
the date of this communication. Neither First Cash nor Cash America
gives any assurance (1) that either First Cash or Cash America will
achieve its expectations, or (2) concerning any result or the
timing thereof. All subsequent written and oral forward-looking
statements concerning First Cash, Cash America, the proposed
transaction, the combined company or other matters and attributable
to First Cash or Cash America or any person acting on their behalf
are expressly qualified in their entirety by the cautionary
statements above.
Additional Information and Where to Find It
This communication is for informational purposes only and does
not constitute an offer to sell or the solicitation of an offer to
buy any securities or a solicitation of any vote or approval with
respect to the proposed transaction between First Cash and Cash
America or otherwise, nor shall there be any sale, issuance or
transfer of securities in any jurisdiction in contravention of
applicable law. No offer of securities shall be made except by
means of a prospectus meeting the requirements of Section 10 of the
Securities Act of 1933, as amended. The proposed transaction
between First Cash and Cash America will be submitted to the
respective stockholders of First Cash and Cash America for their
consideration. First Cash will file with the SEC a registration
statement on Form S-4 that will include a joint proxy statement of
First Cash and Cash America that also constitutes a prospectus of
First Cash. First Cash and Cash America will deliver the joint
proxy statement/prospectus to their respective stockholders as
required by applicable law. First Cash and Cash America also plan
to file other documents with the SEC regarding the proposed
transaction. This communication is not a substitute for any
prospectus, proxy statement or any other document which First Cash
or Cash America may file with the SEC in connection with the
proposed transaction. INVESTORS AND SECURITY HOLDERS OF FIRST
CASH AND CASH AMERICA ARE URGED TO READ THE JOINT PROXY
STATEMENT/PROSPECTUS AND ANY OTHER RELEVANT DOCUMENTS THAT WILL BE
FILED WITH THE SEC CAREFULLY AND IN THEIR ENTIRETY WHEN THEY BECOME
AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT
FIRST CASH, CASH AMERICA, THE PROPOSED TRANSACTION AND RELATED
MATTERS. Investors and stockholders will be able to obtain free
copies of the joint proxy statement/prospectus and other documents
containing important information about First Cash and Cash America,
once such documents are filed with the SEC, through the website
maintained by the SEC at www.sec.gov. First Cash and Cash America
make available free of charge at www.firstcash.com and
www.cashamerica.com, respectively (in the “Investor” or “Investor
Relations” section, as applicable), copies of materials they file
with, or furnish to, the SEC.
Participants in the Merger Solicitation
First Cash, Cash America, and certain of their respective
directors, executive officers and other members of management and
employees may be deemed to be participants in the solicitation of
proxies from the stockholders of First Cash and Cash America in
connection with the proposed transaction. Information about the
directors and executive officers of First Cash is set forth in its
proxy statement for its 2015 annual meeting of stockholders, which
was filed with the SEC on April 30, 2015. Information about the
directors of Cash America is set forth in its proxy statement for
its 2016 annual meeting of shareholders, which was filed with the
SEC on April 7, 2016, and information about the executive officers
of Cash America is set forth in Cash America’s Annual Report on
Form 10-K, which was filed with the SEC on February 26, 2016. These
documents can be obtained free of charge from the sources indicated
above. Other information regarding those persons who are, under the
rules of the SEC, participants in the proxy solicitation and a
description of their direct and indirect interests, by security
holdings or otherwise, will be contained in the joint proxy
statement/prospectus and other relevant materials to be filed with
the SEC when they become available.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20160428005582/en/
First Cash Contacts:InvestorsGlobal IR GroupGar Jackson,
949-873-2789gar@globalirgroup.comorFirst CashDoug Orr,
817-505-3199Executive Vice President and Chief Financial
Officerinvestorrelations@firstcash.comorMediaJoele Frank Wilkinson
Brimmer KatcherDan Katcher / Barrett Golden, 212-355-4449orCash
America Contacts:InvestorsL. Dee Littrell,
817-570-1661dlittrell@cashamerica.comorMediaYolanda Walker,
817-333-1973ywalker@cashamerica.com
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