First Cash Financial Services, Cash America To Merge

(RTTNews) - First Cash Financial Services Inc. (FCFS), an international operator of retail pawn stores in Latin America and the United States, and Cash America International, Inc. (CSH), a operator of retail pawn stores in the United States, 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.

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.

As per 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.

FirstCash will be led by a proven leadership team.. 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.

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.

In a separate press release, First Cash Financial Services raised its fiscal full-year 2016 guidance for earnings to be in the range of $2.25 to $2.45 per share. This is $0.05 above its previously announced range of $2.20 to $2.40 per share. Analysts polled by Thomson Reuters expected the company to report earnings of $2.30 per share for fiscal year 2016. Analysts' estimates typically exclude special items.

First Cash Financial also announced that the Board of Directors has declared a second quarter cash dividend of $0.125 per common share. The dividend is payable on June 15, 2016 to stockholders of record as of June 1, 2016.