NEW YORK (The Deal) -- Debt collection firm Portfolio Recovery Associates (PRAA) late Wednesday moved to substantially increase its international presence, agreeing to acquire Aktiv Kapital of Norway in a deal valued at $1.3 billion.
Terms of the deal call for Norfolk, Va.-based Portfolio Recovery to pay $880 million in cash for Aktiv, while also assuming about $435 million in debt. The company said that it will fund the purchase with a combination of cash, $170 million in seller financing, $435 million from its existing revolving credit facility and by accessing an accordion feature of its credit facility.
Oslo-based Aktiv specializes in the purchase and servicing of nonperforming consumer loans in Canada and European markets, recording $1.9 billion in estimated remaining collections from customers at year end 2013. Portfolio Recovery said that the deal would provide it with access to new markets beyond its core U.S. and U.K. operations, and create one of the world's largest acquirers of nonperforming consumer debt from banks and other creditors.
Combined the two companies would have about $4.6 billion in estimated remaining collections."This will be a transformative transaction for PRA, expected to be immediately accretive to earnings," Portfolio Recovery chairman and CEO Steve Fredrickson said in a statement. "In Aktiv Kapital, PRA has found a true partner, an international acquirer of consumer debt with a conservative balance sheet, a deep and diverse data set, and remarkable analytical and operating capabilities." Post-deal, Portfolio Recovery said it expects Aktiv CEO Geir Olsen to remain with the firm. The company also said it expects to book expenses related to the deal totaling $15 million spread over the first two quarters of the year. William Blair acted as the sole financial adviser to Aktiv, while a Deutsche Bank Securities team of Niron Stabinsky and Ravi Raghunathan advised Portfolio Recovery.
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV